Why the U.S. Dollar Dominates Global Markets

The U.S. dollar remains the dominant currency in global commodity markets. Many goods are priced and traded in dollars, while international payments are often settled in the same currency. The U.S. Dollar Index tracks its value against a basket of six major currencies. This dominance gives the United States a major financial advantage. It can borrow large sums in its own currency at relatively low interest rates and with limited default risk. Many other governments and companies must borrow in dollars instead, exposing them to exchange-rate pressure, higher costs and possible repayment difficulties. This advantage is often called America’s “exorbitant privilege”. It also raises a wider question: does a strong-dollar policy truly serve the United States and the global economy?

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