The quick and dramatic changes in the markets in which stakeholders globally (made up of banks, commercial companies, investment management firms, hedge funds, retail Forex brokers, and investors) are able to buy, sell, exchange and speculate on different currencies reflect the argument that the international currency system has been a product of the past; and by implication, the dollar's role reflect America's historical clout, and not its present stature. The United States dollar has enjoyed what France's finance minister in the 1960s, Valery Giscard d'Estaing, complained about as 'an exorbitant privilege'. Since the mid 20th Century, the United States dollar has been the de facto world currency; with 40 and 60 percent of international financial transactions denominated in dollars and excelled as the world's principal reserve currency. And in the period following the Breton Woods Conference in 1944, with exchange rates around the world pegged against the United States dollar, this rather reinforced the dominance of the United States dollar as a global currency. The only two known serious competitors to the eminence of the United States dollar as a world currency has been the Japanese yen which became ever more used as an international currency in the 1980s, but its utilization as an international currency diminished with the Japanese recession in the 1990s; and more recently, the euro which has increasingly competed with the US dollar in international finance.
This whole concept of a global world currency refers to the monetary systems that countries use to conduct business predicated on the agreement among countries that the exchange of goods and services is done according to exchange rates based on the major world currencies of the financially stable and active countries. Of course there are transaction costs involved when dealing with international payment systems – however, for major currencies transaction costs are negligible with respect to the price of commodities. It is critical therefore, to understand the monetary lingo of a country you want to do business in order to make the most of your dollars. Besides, often times, inflation does offer quite unique challenges for investors. Inflation with regards to world currencies means that inflation can devalue various currencies changing the so called rate of exchange. It is always advisable to have prior knowledge of what a country's currency looks like, the denominations you will be dealing with and the current exchange rates because it is never a good experience having to fumble with fistfuls of strange looking bills in a foreign country.
International Currency Payment Systems
For the business traveler and/or investor, there are certain things worth knowing:
- A word for the wise, it is always a good thing to resist the urge to exchange funds at airports, train stations, hotels and cash kiosks. Actual banks in any country of the world always offer much better exchange rates. Some banks in investors' home countries do have foreign cash options worth looking into as well. And by getting some foreign cash ahead of time either from local banks several days before travel or purchase currency online and have it delivered several days before travel are all more desirable options.
- Also prudent to take advantage of FOREX training [http://www.forex-training.com/], an online collaborative environment which provides high quality training and educational resources for foreign exchange ('Forex') and commodity traders.
- Also, before you travel, review pictures of currencies you will encounter along the way.
- And more over, consider carrying a currency converter to speed up the process.
There are other great resources available to help with a business traveler or investor's international experience. Some notable resources include:
- Venstar Exchange [http://www.venstar-exchange.com/] - with a team of international payments and foreign currency exchange experts, Venstar offers tailored international payment solutions and international wire transfer services at the lowest possible rates on all foreign currency exchange transactions. Venstar's assistance and ability to send money worldwide can help streamline a company's international payment processes.
- Bloomberg [http://www.bloomberg.com/markets/currencies/] offers a chart of 8 major world currencies.
- The Financial Times [http://markets.ft.com/ft/markets/currencies.asp] offers another cross chart along with access to the latest news, charts and spot rates and analysis of relative currency strength worldwide with the unique currency macromaps tool. FT also provides a currency converter to get instant exchange rate conversions between 31 major world currencies.
- Exchange-Rates.org [http://www.exchange-rates.org/] offers world currency exchange rates and currency exchange rates history.
- XE [http://www.xe.com/ucc/] provides a handy currency converter tool to calculate exchange rates between world currencies. XE's Universal Currency Converter® offers the functionality to perform currency and foreign exchange calculations using live, mid-market rates. The Universal Currency Converter® contains the top 85 currencies listing the top 10 first.
- CNBC [http://www.cnbc.com/id/15839178] pairs world currencies and provides up to date charts regarding exchange rates.
- Aneki.com [http://www.aneki.com/lists.html], as a source for world rankings, offers a list of countries with their corresponding currency and abbreviation.
- Options A to Z [http://www.optionsatoz.com/Classes/FreeClasses/ExploringtheWorldofCurrencies.aspx] offers a free class entitled 'Exploring the World of Currencies' with additional classes on understanding currency quotes using currency futures and the creation of exchange rates.
- ADVFN [http://www.advfn.com/] describes the history of world currency in general and provides links to detailed information about specific currencies.
Today, even though China's Yuan appears to be posing a challenge to the United States dollar, and with China's economy probably surpassing America's economy in outright size within 20 years, America's currency punches above its economy's diminished weight in the world. Further, even with America's share of global output (just 20%), trade (only 11%) and with financial assets (about 30%) all shrinking in many respects, as the emerging economies of Asia flourish, many of these economies such as South Korea still sell their exports for dollars. And many including China itself, 'still peg their currencies to the greenback, however, loosely; and about 60% of the world's foreign exchange reserves remain in dollars. Suffice to contend, therefore, for China's Yuan to compete and be the dominant currency; China has to open its financial system to the world, according to a [most recent speculation] on China's currency' projected in the January 2011 issue of The Economist magazine.
xe foreign exchange, curency trading, forex, foreign exchange, investment management firms, commercial companies, breton woods, united states dollar, japanese yen, chinese yuan, international payment systems, foreign direct investment, retail forex brokers, banks, hedge fund
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