Why does the US dollar fluctuate with other currencies and what happens if its value falls?

0
100
Why does the US dollar fluctuate with other currencies and what happens if its value falls?

The North American currency throughout the 20th century has positioned itself on a pedestal from which it has been almost indeclinable. So much so that it is already part of popular culture to know the denominations of dollar bills, as well as their characters.

It is a consequence of the generalization of the use of currency in all economic spheres of citizens regardless of their location, stratum or condition.

We will feel the symbolic pedestal to which we refer in everyday situations. An example, the billing of services of common companies or consortiums on a day-to-day basis in cities.

Such is the case of UBER, which anchors its billing to the currency of the North, why UBER charges in dollars and not in the local currency, is a clear example of the hegemony of this currency.

Here we are going to explain to you why the fluctuations of the dollar occur with the other currencies. In addition, we will show you its influence on the world market if its price falls.

Green hegemony of the US dollar

Motivated by the bellicosity of the last century, many of the world’s economies were in stagnation, since the great powers were at war.

This favors an irregular behavior of the markets that diminishes profits and the flow of capital towards investors and industries. The United States had a large industrial apparatus, which allows it to deal with widespread commercial setbacks.

different dollar bills

As we know very well, the importance of money in our lives, society and business is leading. And even more so in times of scarcity, the countries most affected by war events were precisely those who could, in any given case, establish market competitiveness.

But the general decline intensifies the need for loans in US dollars, since it was the country that could economically help the flagellated European and Asian markets.

At the beginning it becomes something obligatory and logical, but with the passing of time, it becomes a trend for shelter and protection of capital. Since the devaluation processes in this currency are not as marked as in others.

The public will now append the trusted and referential value. All this makes people feel safer with dollars than with regional currencies.

If the US dollar is so stable, why does it fluctuate?

Stability will always be relative. Being stable does not mean being static and invariable, otherwise it would not be an economy. Stability will be given by the exchange levels that a regional economy can sustain and in the case of the dollar.

This stability in the markets and the careful safeguarding of reserves keeps the market stable. Let us remember that the printing of the bills is subject to the backing of the bill.

dollar bills

An imbalance in the markets involves a disproportion between the poles of supply and demand. This suggests that the greater the quantity of an element, its value will be diminished due to the great ease of finding it. On the other hand, the same thing happens but in the opposite direction with scarcity. As there is little of an element, its price skyrockets.

That is why local economies are affected by supply and demand, it is not that it is worth more or less at certain times, it is that there are times when there is more or less physical currency which makes its acquisition more relaxed or more tortuous

But this occurs in localities where high devaluation processes are not experienced, that is, hyperinflation. In these cases it is a breeding ground for fluctuation. For example, when the local currency is devalued, the States increase wages, and the effects of the wage increase in the market are blunt, since many resort to the purchase of foreign currency to protect their assets, destabilizing the balance of demand.

What happens if the value of the US dollar falls?

This will be subject to the situation being discussed, if it happens due to a general worldwide loss of value or purchasing power of the dollar, it would be a great crisis, like releasing Pandora’s box, but this does not happen.

Usually its value falls due to massive offer of shares. What could be translated into particular advantages of the regions for the commercialization of their products.

Similarly, the fall of the dollar would directly affect the economy of all countries that use this currency as official currency within their territory.

Previous articleCars you should buy before they expire, Toyota GR86
Next articleWhat is the pound sterling and where is it from and how much is it worth in dollars or euros?

LEAVE A REPLY

Please enter your comment!
Please enter your name here