The dollar (currency code USD) is the unit of currency of the United States. The U.S. dollar has also been adopted as the official and legal currency by the governments in a few other countries. The U.S. dollar is normally abbreviated as the dollar sign, $, or as USD or US$ to distinguish it from other dollar-denominated currencies and from others that use the $ symbol. It is divided into 100 cents.

Official user(s)	United States
Unofficial user(s)	9 countries and territories  British Virgin Islands (U.K.) , East Timor, Ecuador,  El Salvador, Marshall Islands , Federated States of Micronesia , Palau,  Panama  ,Turks and Caicos Islands (U.K.)
Pegged by	21 currencies--- Aruban florin, Bahamian dollar, Bahraini dinar- Barbadian dollar - Belize dollar - Belarusian -uble , Bermudian dollar, Cayman Islands dollar ,Cuban convertible peso ,Djiboutian franc,East Caribbean dollar,Eritrean nakfa ,Hong Kong dollar, Jordanian dinar ,Lebanese pound, Maldivian rufiyaa,Netherlands Antillean gulden ,Omani rial ,Qatari riya,l Saudi riyal ,United Arab Emirates irham,

Adopted by the Congress of the Confederation of the United States on July 6, 1785,^[2] the U.S. dollar is the currency most used in international transactions.^[3] Several countries use the U.S. dollar as their official currency, and many others allow it to be used in a de facto capacity.^[4] In 1995, over US $380 billion were in circulation, two-thirds of which was outside the United States. By 2005, that figure had doubled to nearly $760 billion, with an estimated half to two-thirds being held overseas,^[5] representing an annual growth rate of about 7.6%. However, as of December 2006, the dollar was surpassed by the euro in terms of combined value of cash in circulation.^[6] Since then the current value of euro cash in circulation has risen to more than €695 billion, equivalent to US$1,029 billion at current exchange rates.^[7]

Dollar sign

The symbol $, usually written before the numerical amount, is used for the U.S. dollar (as well as for many other currencies). An example would be "$14", which is read as "fourteen dollars". The sign's ultimate origins are not certain, though it is widely accepted that it comes from the Spanish coat of arms, which carries the two Pillars of Hercules and the motto Non Plus Ultra in the shape of an "S". The Spanish were the first to use the dollar sign for their currency, which was later adopted in the US, and which was later replaced by the US dollar.

A popular, but wrong, theory is that the dollar sign was created when a printing press accidentally printed the U and the S overlapping, and it then evolved to look like the modern day $. However this is impossible, because the dollar sign was used by the Spanish before the United States existed.

History

Rare 1934 $500 Federal Reserve Note, featuring a portrait of President William McKinley

The first dollar coins issued by the United States Mint were of the same size and composition as the Spanish dollar and even after the American Revolutionary War the Spanish and U.S. silver dollars circulated side by side in the United States. The coinage of various English colonies also circulated. The lion dollar was popular in the Dutch New Netherland Colony (New York), but the lion dollar also circulated throughout the English colonies during the Seventeenth and early Eighteenth centuries. Examples circulating in the colonies were usually fairly well worn so that the design was not fully distinguishable, thus they were sometimes referred to as "dog dollars".^[8]

Private banks issued currency backed by Spanish and U.S. silver and gold coinage, although the federal government did not do so until the American Civil War.

The U.S. dollar was originally specified by the Coinage Act of 1792 to be a unit of weight (471.25 grains of troy silver (about 30.54 g of silver)) and not one of money as it is thought of today. The value of gold or silver contained in the dollar was then converted into relative value in the economy for the buying and selling of goods. This allowed the value of things to remain fairly constant over time, except for the influx and outflux of gold and silver in the nation's economy. According to an evaluation of data from the U.S. Department of Treasury, the cost of goods and services remained relatively consistent between 1635 and 1913, around a level of roughly 25 times the buying power of the U.S. dollar in 2006

For articles on the currencies of the colonies and states, see Connecticut pound, Delaware pound, Georgia pound, Maryland pound, Massachusetts pound, New Hampshire pound, New Jersey pound, New York pound, North Carolina pound, Pennsylvania pound, Rhode Island pound, South Carolina pound and Virginia pound.

The continental currency suffered from printing press inflation and was replaced by the silver dollar at the rate of 1 silver dollar = 1000 continental dollars.

Silver and gold standards

From 1792, when the Mint Act was passed, the dollar was pegged to silver and gold at 371.25 grains of silver, 24.75 grains of gold (15:1 ratio). 1834 saw a shift in the gold standard to 23.2 grains, followed by a slight adjustment to 23.22 grains in 1837 (16:1 ratio).In 1862, paper money was issued without the backing of precious metals, due to the Civil War. Silver and gold coins continued to be issued and in 1878 the link between paper money and coins was reinstated. This disconnect from gold and silver backing also occurred during the War of 1812. The use of paper money not backed by precious metals had occurred under the Articles of Confederation from 1777 to 1788 when paper money became referred to as "not worth a continental". This was a primary reason for the "no state shall require anything but gold and silver as tender in payment of debt" clause of the Constitution. In 1900, the bimetallic standard was abandoned and the dollar was defined as 23.22 grains of gold, equivalent to setting the price of 1 troy ounce of gold at $20.67. Silver coins continued to be issued for circulation until 1964, when all silver was removed from dimes and quarters, and the half dollar was reduced to 40% silver. Silver half dollars were last issued for circulation in 1969.

Gold coins were withdrawn in 1933 and the gold standard was changed to 13.71 grains, equivalent to setting the price of 1 troy ounce of gold at $35. This standard persisted until 1968. Between 1968 and 1975, a variety of pegs to gold were put in place. The price was at $42.22 per ounce before January 1, 1975saw the U.S. dollar freely float on currency markets.

According to the Bureau of Printing and Engraving, the largest note it ever printed was the $100,000 Gold Certificate, Series 1934. These notes were printed from December 18, 1934 through January 9, 1935, and were issued by the Treasurer of the United States to Federal Reserve Banks only against an equal amount of gold bullion held by the Treasury. These notes were used for transactions between Federal Reserve Banks and were not circulated among the general public.

Banknotes

The United States dollar is unique in the way that there have been more than 10 types of banknotes, such as Federal Reserve Bank Note, gold certificate, and United States Note. See Obsolete U.S. currency and coinage for complete listing. The Federal Reserve Note is the only type that remains in circulation since the 1970s.Currently printed denominations are $1, $2, $5, $10, $20, $50, and $100. Notes above the $100 denomination ceased being printed in 1946 and were officially withdrawn from circulation in 1969. These notes were used primarily in inter-bank transactions or by organized crime; it was the latter usage that prompted President Richard Nixon to issue an executive order in 1969 halting their use. With the advent of electronic banking, they became less necessary. Notes in denominations of $500, $1,000, $5,000, $10,000, and $100,000 were all produced at one time; see large denomination bills in U.S. currency for details.

The design of the notes has been accused of unfriendly to the visually-impaired. A U.S. District Judge ruled on November 28, 2006 that the American bills gave an undue burden to the blind and denied them "meaningful access" to the U.S. currency system. The judge has ordered the Treasury Department to begin working on a redesign within 30 days.^[14]

Value

Consumer Price Index

Factors influencing the price

Borrowing costs, economic growth: The minutes to the August 8, 2006 meeting, at which the Federal Open Market Committee kept short-term interest rates unchanged for the first time in more than two years, supported the view that U.S. borrowing costs have peaked. The dollar fell on the news on August 29, 2006, and has continued lower August 30, 2006, largely ignoring news the U.S. government has revised its estimate of second-quarter economic growth 2006 up to 2.9% from the initial 2.5%.^[15]

Time-relative value

The following table shows the equivalent amount of goods, in a particular year, that could be purchased with $1.^[16]

Dollar versus euro

Euro per US dollar 1999-2008

Year		Highest ↑			Lowest ↓
		Date	Rate		Date	Rate
1999		03 Dec	0.9985		05 Jan	0.8482
2000		26 Oct	1.2118		06 Jan	0.9626
2001		06 Jul	1.1927		05 Jan	1.0477
2002		28 Jan	1.1658		31 Dec	0.9536
2003		08 Jan	0.9637		31 Dec	0.7918
2004		14 May	0.8473		28 Dec	0.7335
2005		15 Nov	0.8571		03 Jan	0.7404
2006		02 Jan	0.8456		05 Dec	0.7501
2007		12 Jan	0.7756		27 Nov	0.6723
2008		21 Jan	0.6905		18 Mar	0.6341
Source: Euro exchange rates in USD, ECB

Not long after the introduction of the euro (; ISO 4217 code EUR) as a cash currency in 2002, the dollar began to depreciate steadily in value. As U.S. trade and budget deficits continued to increase, the euro started rising in value. By December 2004, the dollar had fallen to new lows against all major currencies; the euro rose above $1.36/€ (under €0.74/$) for the first time, in contrast to previous lows in early 2003 (0.87/$). In the first quarter of 2004 the U.S. dollar, with the advantage of Federal Reserve's policy of raising the interest rates, regained some standing against all major currencies, climbing from â0.78/$ to 0.84/$. However, all gains were lost in the second half of 2004, and the dollar stood at 0.74/$ at the end of 2004. Since 2002, the only year in which the dollar actually recovered against the euro was 2005. Although some analysts previewed the dollar dropping as far as $1.60/ (0.63/$), it finished 2005 with an increase against the euro, climbing to 0.83/$. An interest rate reduction by the Federal Reserve on September 18, 2007, raised the euro's value significantly and caused the dollar to fall below €0.70 one month later, to new record lows.^[19] Economists like Alan Greenspan suggest that another reason for the continued fall of the dollar is its decreasing role as the world's reserve currency. Jim Rogers declared that he thinks the dollar's value will fall even further, especially against the Chinese yuan. Chinese officials signaled plans to diversify the nation's $1.43 trillion reserve in response to a falling U.S. currency which also set the dollar under pressure.^[20][21] The dollar sank to new lows against the euro in the days following 4 March 2008, following a series of dour reports on the U.S. economy and expectations that the Federal Reserve will continue slashing interest rates.^[22]

The dollar as the major international reserve currency

The dollar is the most important international reserve currency, followed by the euro. The euro inherited this status from the German mark, and since its introduction, has increased its standing considerably, mostly at the expense of the dollar. Despite the dollar's recent losses to the euro, it is still by far the major international reserve currency, with an accumulation more than double that of the euro.

In August 2007, two scholars affiliated with the government of the People's Republic of China threatened to sell its substantial reserves in American dollars in response to pressure that they exercise fair trade.^[23] The Chinese government denied that selling dollar-denominated assets would be an official policy in the foreseeable future.

Former Federal Reserve Chairman Alan Greenspan said in September 2007 that the euro could replace the U.S. dollar as the world's primary reserve currency. It is "absolutely conceivable that the euro will replace the dollar as reserve currency, or will be traded as an equally important reserve currency."^[24]

Currency composition of official foreign exchange reserves

	'95	'96	'97	'98	'99	'00	'01	'02	'03	'04	'05	'06	'07*
US dollar	59.0%	62.1%	65.2%	69.3%	70.9%	70.5%	70.7%	66.5%	65.8%	65.9%	66.4%	65.7%	64.6%
Euro					17.9%	18.8%	19.8%	24.2%	25.3%	24.9%	24.3%	25.2%	25.8%
German mark	15.8%	14.7%	14.5%	13.8%
Pound sterling	2.1%	2.7%	2.6%	2.7%	2.9%	2.8%	2.7%	2.9%	2.6%	3.3%	3.6%	4.2%	4.2%
Japanese yen	6.8%	6.7%	5.8%	6.2%	6.4%	6.3%	5.2%	4.5%	4.1%	3.9%	3.7%	3.2%	2.8%
French franc	2.4%	1.8%	1.4%	1.6%
Swiss franc	0.3%	0.2%	0.4%	0.3%	0.2%	0.3%	0.3%	0.4%	0.2%	0.2%	0.1%	0.2%	0.2%
Other	13.6%	11.7%	10.2%	6.1%	1.6%	1.4%	1.2%	1.4%	1.9%	1.8%	1.9%	1.5%	2.0%
	Sources: 1995-1999, 2006-2007 IMF: Currency Composition of Official Foreign Exchange ReservesPDF (84 KB) Sources: 1999-2005, ECB: The Accumulation of Foreign ReservesPDF (816 KB)           v â€¢ d â€¢ e       *Q1-Q3 only.

US Dollar Index

The US Dollar Index (USDX) is the creation of the New York Board of Trade (NYBOT). It was established in 1973 for tracking the value of the USD against a basket of currencies, which, at that time, represented the largest trading partners of the United States. It began with 17 currencies from 17 nations, but the launch of the euro subsumed 12 of these into just one, so the USDX tracks only six currencies today.

Currency units per U.S. dollar
	Weighting
Euro	57.6%
Japanese yen	13.6%
Pound sterling	11.9%
Canadian dollar	9.1%
Swedish krona	4.2%
Swiss franc	3.6%
Source: NYBOT, "US Dollar Index", pg.3 (PDF)

The Index is described by the NYBOT as "a trade weighted geometric average".^[25] The baseline of 100.00 on the USDX was set at its launch in March 1973. This event marks the watershed between the fixed-rate system of the Bretton Woods regime and the floating-rate system of the Smithsonian regime. Since then, the USDX has climbed as high as the 160s and drifted as low as the 70s.

The USDX has not been updated to reflect new trading realities in the global economy, where the bulk of trade has shifted strongly towards new partners like China and Mexico and oil exporting countries while the United States homeland has itself de-industrialized.

Dollarization and fixed exchange rates

Other nations besides the United States use the U.S. dollar as their official currency, a process known as official dollarization. For instance, Panama has been using the dollar alongside the Panamanian balboa as the legal tender since 1904 at a conversion rate of 1:1. Ecuador (2000), El Salvador (2001), and East Timor (2000) all adopted the currency independently. The former members of the U.S.-administered Trust Territory of the Pacific Islands, which included Palau, the Federated States of Micronesia, and the Marshall Islands, chose not to issue their own currency after becoming independent, having all used the U.S. dollar since 1944. Two British dependencies also use the U.S. dollar: the British Virgin Islands (1959) and Turks and Caicos Islands (1973).

Some other countries link their currency to U.S. dollar at a fixed exchange rate. The local currencies of Bermuda and the Bahamas can be freely exchanged at a 1:1 ratio for USD. Argentina used a fixed 1:1 exchange rate between the Argentine peso and the U.S. dollar from 1991 until 2002. The currencies of Barbados and Belize are similarly convertible at an approximate 2:1 ratio. In Lebanon, one dollar is equal to 1500 Lebanese pound, and is used inter­changeably with local currency as de facto legal tender. The exchange rate between the Hong Kong dollar and the United States dollar has also been linked since 1983 at HK$7.8/USD, and pataca of Macau, pegged to Hong Kong dollar at MOP1.03/HKD, indirectly linked to the U.S. dollar at roughly MOP8/USD. Several oil-producing Gulf Arab countries, including Saudi Arabia, peg their currencies to the dollar, since the dollar is the currency used in the international oil trade.

The People's Republic of China's renminbi was informally and controversially pegged to the dollar in the mid-1990s at ¥ 8.28/USD. Likewise, Malaysia pegged its ringgit at RM3.8/USD in 1997. On July 21, 2005 both countries removed their pegs and adopted managed floats against a basket of currencies. Kuwait did likewise on May 20, 2007,^[26] and Syria did likewise in July 2007.^[27]

Belarus, on the other hand, will tie its currency, the Belarusian ruble, with the U.S. dollar in 2008.^[28]

In some countries, such as Peru and Uruguay, although USD is not officially regarded as a legal tender, it is commonly accepted. In Mexico's border area and major tourist zones, it is accepted as if it were a second legal currency. Many stores in Canada also accept the U.S. dollar. In Cambodia, the USD circulates freely, or even preferred over the Cambodian riel. Amounts of one dollar or more are given in dollars, while the riel serves as a subunit.^[29][30][31] After the U.S. invasion of Afghanistan, U.S. dollars are accepted as if it were legal tender. Prices of most big ticket items such as houses and cars are set in U.S. dollars

See also

External links

• U.S. Bureau of Engraving and Printing
• The U.S. Treasury's Coins & Currency portal
• American Currency Exhibit at the San Francisco Federal Reserve Bank
• U.S. Treasury page with images of all current banknotes
• Summary of BEP Production Statistics
• A lot of interactive charts of U.S. Dollar to other currencies with 20 technical indicators - from 1970s
• U.S. Currency and Coin Outstanding and in Circulation
• PaperMoneyGuide - Information for collectors of US Currency
• Relative values of the US dollar, from 1790 to 2006
• Wheres George Currency Tracking Project

• The Global History of Currencies - United States of America
• Global Financial Data currency histories table