The US Dollar (USD)

The US Dollar was officially established in 1792, following the passage of the Coinage Act, which created the United States Mint and laid the foundation for a standardized monetary system.

The dollar was initially based on the Spanish dollar and backed by gold and silver to ensure stability and trust.

Throughout the 19th and early 20th centuries, the dollar underwent numerous transformations, including the adoption of the gold standard, which pegged its value to a specific amount of gold.

The modern history of the US Dollar began in 1913 with the creation of the Federal Reserve System, which became the central authority for issuing currency and managing monetary policy.

During the mid-20th century, the Bretton Woods Agreement established the dollar as the world’s reserve currency, linking it to gold and positioning it at the heart of international finance.

In 1971, the United States ended the gold standard under President Nixon, effectively allowing the dollar to float freely in global markets, leading to its status as a fiat currency.

Since then, the dollar has become the most traded currency and serves as the global reserve currency. It is widely held by central banks and used in international transactions across the globe, providing a stable store of value. About 60% of foreign currency reserves worldwide are in US dollars.

Over the past year, the US Dollar (USD) has experienced significant movements against major global currencies, such as the Euro (EUR), British Pound (GBP), and Japanese Yen (JPY):

• EUR/USD: The exchange rate began at around 1.0700 in early January and rose significantly, exceeding 1.1000 by February. This indicates a period of strength for the Euro against the US Dollar. However, through February, the rate declined, dropping to just above 1.0500 by early March. From March, the rate fluctuated with a moderate upward trend, peaking at approximately 1.1250 in mid-July. Following this high, the rate trended downward until October, reaching a low below 1.0500. By late December, however, the rate had climbed back above 1.1000, signaling a renewed strengthening of the Euro relative to the US Dollar.
• GBP/USD: The exchange rate began the year at around 1.2100 in early January. Throughout the month, there was a slight increase, reaching approximately 1.2400, suggesting that the British Pound was gaining strength against the US Dollar. Starting in February, the exchange rate declined, dropping below 1.2000 in March, marking the lowest point of the year and indicating a strengthening of the US Dollar during this period. Afterwards, the Pound began to recover, showing an upward trend. By mid-July, the rate had surpassed 1.3000, the highest value of the year. Following this peak, the rate declined again but rebounded by December, climbing above 1.2500 by year-end.
• JPY/USD: The exchange rate started at just above 0.0075 at the beginning of January. By mid-January, it had increased to approximately 0.0078, indicating a brief period of strengthening for the Japanese Yen against the US Dollar. In February, the rate began to decline, gradually dropping to around 0.0073 by early March. From March to August, the exchange rate fluctuated between 0.0070 and 0.0076, reflecting a period of relative stability. However, a further decline occurred from August to November, with the rate falling as low as 0.0066, representing a significant weakening of the Yen. Starting in November, the Yen began a slight recovery, and by December, the rate had risen back to around 0.0070, suggesting renewed strength of the Yen against the Dollar.