Often I have heard how some country wants to move away from dollars. How BRICS is trying to do that. But why does it matter? Since all money has some exchange rate does it matter if I pay 1 USD or 85 INR or 140 JPY? It’s all the same no?
Plus why do people trade in dollars? If I as an Indian want to buy something from China won’t the seller just go “gimme this much Yuan” and then I’ll convert my rupees to yuan and viola. Why is it said that trade happens in dollars?
Comments
Dollars are a stable reserve currency. At least until recently…so everyone agreeing on a base currency to trade in means everyone feels safer. In your example, an Indian company has to invest in yuan and they might not want to. With dollars, it’s a ‘global currency’ and therefore ‘safer.’
For the US, this is great because the whole world is investing in your currency and therefore literally invested in the success of the dollar, and the US. Which is a great place to be.