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> People generally have to buy energy (oil) in our currency, which adds a great deal of support (though we’ve already seen the very beginnings of the PetroYuan)
by bdcs 12y ago
> People generally have to buy energy (oil) in our currency, which adds a great deal of support (though we’ve already seen the very beginnings of the PetroYuan).
Can someone explain why using USD as a medium of exchange supports the USD? I can see this effect insofar as central banks will hold a trade-weighted basket of currencies and having more trade in USD will increase that share of the basket. Other than this effect, is there (an) other(s)?
- twoodfin 12y agoWhile products that can only be purchased with dollars are in demand there will always be commensurate demand for those dollars. Demand for iPhones supports the dollar in the same way, though in a less directly obvious manner.
- bdcs 12y agoI understand that products and services sold by US companies boost USD (vis-a-vis buying iPhones in your example), but why would, say, a Brit buying a Xiaomi phone using USD boost the USD? The USD holding time would be rather short, I would imagine.