The US dollar is the most widely used currency in the world, underpinning the vast majority of global finance and trade.
And the fact that America’s own currency is the lifeblood of the world economy — a function of US economic strength, military power, and political stability — gives the US what has been called an “exorbitant privilege.” That is, the US gets to borrow at lower rates than anyone else with its level of debt, and the country can exert tremendous power over global financial flows.
But huge demand for the US dollar has also helped to boost its value over the years, in ways some economists — particularly those close to Donald Trump — say has been harmful to the US.
After all, a stronger dollar fuels cheap imports while making America’s exports less competitive. The global greenback, they say, has been better for Wall Street than for Main Street, and some want Trump to use America’s economic and military power to force other countries to reset and reduce the value of the dollar. A narrower version of this was done in 1985 with the so-called Plaza Accord. (You can learn more about that here.)
For historical perspective, here’s a look at the dollar’s value over the half-century since US President Richard Nixon removed the currency from the gold standard, allowing it to float freely.
We’ve used a flexible, trade-weighted index, which measures the dollar against the currencies of countries with which the US trades most.