Compare And Contrast The Currencies Of US Dollar Vs. EURO
The two currencies, US dollar and EURO, can be said two of the most effective systems in the economy world. As US dollar is used by the United State, an influential country in terms of both economic and political and EURO is used by twenty-six countries and nineteen of those countries are in the European Union. Perhaps we are not using those two currencies, but we cannot deny that we are affected strongly by them, since the world is becoming smaller because of the globalization, and we are now connecting and influencing each other. The article will briefly introduce US dollar and EURO, following by analysis of their advantages and disadvantages, and the comparison of the two currencies.
Introduction of EURO
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- Increase trade and investment
The Euro system has contributed a lot to the entire currency union, and raised the level of integration. The GDP of the Eurozone is now the second largest in the world, and as a key role of the world economy, it boosts the highest amount in importing and exporting.
Disadvantages of EURO
- Loss of adjusting
If a country has its own currency system and the government is looking after the system, it’s more likely that the government could adjust the interest rate if the government expects the citizens to invest and purchase more. But in the Euro system, a country couldn’t since the currency is controlled by the European central bank.
- Differences between countries
Though just locate next to each other, the economy cycle and status are vary from time to time and from country to country, but since there is only one currency, a government couldn’t control the appreciation and devaluation of the currency, it then leads the country unable to boost exports.
Introduction of US …show more content…
In fact, 90 percent of exchange transactions are related to US Dollar, thus usually the most effective economic statistics have close relationship with the US Dollar. Before 911 occurred, US Dollar was considered to be the safest currency in the world, as playing an important role, lots of people chose America to invest money. However, after 911, the uncertainty raised in the U.S, moreover, due to the financial crisis, the main central bank had speed up the process of diversification of foreign currencies. Nevertheless, US Dollar still plays an important role, and still requires our attentions.
Advantages of US Dollar when USD appreciation
- Imports are cheaper for countries which use USD If a country’s currency lower the value of their money, then products that imported to the U.S will be cheaper. For example, USD: TWD= 1:30; however, the Taiwanese government decide to devaluate their currency, and it result in USD: TWD= 1:35. A product from Taiwan initially prices 300 TWD in Taiwan, which means when imported, 10 USD will be in America; after devaluation, only about 8.5 USD will be in America.
- Foreign companies in the U.S benefit
If a foreign company boosts large sales in America, chances are that as 1% appreciation of US Dollar occurred, the net sales of the company might raises billions EURO. The investors can also benefit in this