Dollar Index Power in Forex Market

jyotsnathakur By jyotsnathakur, 9th Apr 2012 | Follow this author | RSS Feed | Short URL http://nut.bz/1sze26uy/
Posted in Wikinut>Business>Analysis

The privileged status which greenback enjoys is the resultant of politico-economic standing of its country. Strength of a currency is dependent on the financial capabilities and reputation of the geographic unit it represents and not vice-versa.

Dollar Index Power in Forex Market

The privileged status which greenback enjoys is the resultant of politico-economic standing of its country. Strength of a currency is dependent on the financial capabilities and reputation of the geographic unit it represents and not vice-versa. Further, acceptance of us dollar having global reserve currency status confers upon it more genuineness compared to other counterparts. Most of the international transactions, be it by way of foreign investments, trade payments or debt receipts, are in terms of us dollar.

Even today, after the debacle of US economy due to recessionary pressures, world looks up to United States of America regarding the current and future states of world economy. After all, it’s been the world leader in politico-economic arena throughout. European Union, India, Russia, China and Japan tried hard but could not dethrone this vivacious giant. Though, intermittently, they all suffered from the illusion of replacing the king but in vain. It’s true that US fell from the dizzying height but still remains the Numero Uno and guiding force behind economies of every nation, be it developed, developing or under developed.

Forex Market is reined by Dollar Index in every aspect, very much like the position of the country it represents. This index is us dollar cross currency rates against a basket of six major currencies in foreign exchange arena. The constituting currencies are Eurozone Euro, Japanese Yen, Great Britain pound, Canadian Dollar, Swedish Krona and Swiss Franc, in decreasing order of weightage given while calculating dollar index. Hence, this index provides a comparative standing of major currencies of the world against usd. The world forex market gyrates around the pivot called dollar index. Thus, usd index is the measuring scale used to affirm strength of a particular exchange medium or currency in forex trading market.

Such is the powerful grip US and its Greenback have on entire world economy and it’s by product i.e. currencies market.

moderator johnnydod moderated this page.
If you have any complaints about this content, please let us know

Comments

author avatar Denise O
9th Apr 2012 (#)

Nice read. Thank you for sharing.:)

Reply to this comment

author avatar jyotsnathakur
9th Apr 2012 (#)

hi Denise O, felt nice that you liked it.

Reply to this comment

Add a comment
Username
Can't login?
Password