Why Dollar never fails

 

USA Dollar is by far the strongest currency in the world the reason behind is being the all time demand of dollar across the world. Lets understand this by using Geopolitics when a trade between the countries occur it occurs through dollar as a currency so the demand for dollar always remains everywhere for example the Petrodollars. During inflation the Federal Reserve do interest hike due to which many FPIs and FDIs pull off their money from different countries and take that money to do FDs or invest in Government Bonds in USA. In this way they create a deterrent effect for other currencies and make dollar strong by creating the shortage of dollar in other countries and demand of dollar in USA due to which other currencies depreciate due to free market conditions. But countries are not fools they understand the strategy properly of USA the global power, the countries like Russia, China, India, UAE, Saudi, Venezuela, North Korea and Iran  are some countries that started using Yen and their local currencies during trades between them and even there is the possibility of  BRICS currency coming up by the help of which BRICS nations can use it and do trades among themselves. Even many countries started hoarding a lot of golds to back their currencies instead of dollar. India bought a lot of Russian oil by paying Russia in Indian Rupees. In this way countries are appreciating their currencies against US Dollar. Currency when depreciates causes Importers heavy losses, but causes exporters to profit. There is a sleek difference between currency depreciation and devaluation. Depreciation of currency is governed by free market conditions but devaluation of currencies is governed by the intentional depreciation of currencies by Central Banks of different countries to profit exporters of the country like what China does most of the time by buying more USA dollars causing the shortage of dollar in market and due to which demand for dollar increases in the market and dollar becomes stronger and other currencies weaker.