Definition – What does United States Dollar (USD) mean?
The United States dollar (USD) is the official currency of the United States of America. The USD is the world reserve currency as well, so it acts as either the base or quote currency for a majority of currencies worldwide. Major currency pairs featuring the U.S. dollar include:
- USD/JPY
- EUR/USD
- USD/CHF
- USD/CAD
- AUD/USD
- GBP/USD
In addition to these pairs, the USD is often the base currency for many less common currency pairs like the Brazilian real (BRL), Norwegian krone (NOK), Singapore dollar (SGB) and so on.
ForexTerms explains United States Dollar (USD)
The USD is integral to world trade in that it belongs to the world’s largest economy and acts as the world reserve currency. Because of this unique situation, many of the standard economic rules do not seem to apply to the USD.
The U.S. government has had long periods of fiscal irresponsibility and yet the USD has not always suffered during inflationary times that would damage any other currency. This is because, as the world’s largest economy, the USD is considered a safe haven currency in times of global uncertainty. However, this rule doesn’t always hold, and the U.S. dollar does eventually pay for periods of prolonged inflation and trade deficits – it just seems to enjoy a much longer lag before any market reaction takes place.
