Where Is the U.S. Dollar Worth the Most and How's the Outlook?
Even in a domestic economic crisis, the U.S. dollar retains its strength in many places across the world. Where is the U.S. dollar worth the most?
Jan. 15 2021, Published 1:25 p.m. ET
An economic stimulus isn't known for its awesome impact on the dollar. In fact, it's quite the opposite. As Fed Chair Jerome Powell confirmed on Jan. 14, an increased supply of currency during the ongoing COVID-19 pandemic has weighed on the dollar's value. However, there are places in the world where the U.S. dollar retains its worth.
The dollar fell by 0.1 percent compared to the Japanese yen, but it gained some ground against other nations' currencies.
Where the U.S. dollar is worth the most right now
Cambodian person holding U.S. dollars
As of Jan. 15, $1 equals 85.73 Argentine pesos. Both the U.S. dollar and the euro are valuable in Argentina and people usually get great exchange rates.
Vietnam also holds great value in the U.S. dollar. Currently, $1 equals 23,070.32 Vietnamese dong. Other nations in Southeast Asia are the same, including Cambodia — which actually uses the U.S. dollar as part of its normal currency. Cambodians use paper dollars and Cambodian coins for all of their in-person purchases. Usually, $1 hovers around 30 Thai baht and 1,300 Myanmese kyat.
The Chilean peso is also pretty weak against the U.S. dollar. In 2019, it was undervalued by one-third against the U.S. dollar.
The U.S. dollar lost quite a bit of value in 2020
By December 20, 2020, the U.S. dollar fell 4.9 percent from where it was on Jan. 1 that same year. In March, markets crashed and cash securities soared. The dollar value peaked, only to fall off a full 12.6 percent due to the economic stimulus.
With short-term interest rates close to nothing at the time, the dollar's value didn't really stand a chance.
The U.S. dollar has minimal value in these places
The Australian dollar and the Norwegian krone were both winners in 2020. Right now, analysts suggest placing emphasis on the Canadian and Australian dollars and shorting the U.S. dollar.
What to expect from the U.S. dollar in 2021 and beyond
The second round of stimulus is underway. More money is being pumped into the economy, which will place a heavier burden on our currency. Of course, the stimulus is essential to keep the economic wheel turning, although it doesn't necessarily work like it's expected to. However, there will likely be a shift in how the Fed sources, maintains, and grows wealth.
Scott Minerd, the CIO of Guggenheim Investments, says that the Fed should buy gold in response to the dollar's lower value. In a note, Minerd said, "With the Fed going all-in on financing the government deficit, the US dollar could be at risk to negative speculation of its status as the dominant global reserve currency. Investing in gold may help offset this trend."
We'll have to see whether or not Minerd is right in his analysis and whether or not the Fed takes his advice. Whatever the case, the U.S. dollar will likely falter in 2021 by more than it did in 2020. Some experts even suggest that the U.S. dollar could lose a third of its value, which would be problematic for individuals and institutions alike.