USD (United States Dollar)

AAA

DEFINITION of 'USD (United States Dollar)'

The currency abbreviation for the United States dollar (USD), the currency for the United States of America. The United States dollar, or U.S. dollar, is made up of 100 cents and is presented with the symbol $ or US$ to differentiate it from other dollar-based currencies. The U.S. dollar is considered a benchmark currency, and is the currency used the most in transactions across the world. The currency is actually used as an official currency in many countries outside of the U.S., while many others use it alongside their own as an unofficial currency.

INVESTOPEDIA EXPLAINS 'USD (United States Dollar)'

The United States dollar was originally created through the Coinage Act of 1792, which specified that a dollar of currency would be equal to between 371 and 416 grains of silver, and an "eagle" (US$10) at between 247 and 270 grains of gold. Gold coins with equivalent weights were used, and based on this system, the value of the dollar (in purchasing power), would be equivalent to the purchasing power of the gold or silver on which it was based.

In 1933, gold coins were taken back, and the gold standard was changed, setting the price of a troy ounce to $35. This gold standard continued until 1968, when a series of pegs to gold were put in place until 1975. In January of 1975, the U.S. dollar was removed from the gold standard, and was allowed to float freely on the international currency markets.

RELATED TERMS
  1. Authorized Forex Dealer

    Any type of financial institution that has received authorization ...
  2. Quote Currency

    The second currency quoted in a currency pair in forex. In a ...
  3. Confederate Dollar

    A currency issued by the Confederate States of America during ...
  4. Currency Pair

    The quotation and pricing structure of the currencies traded ...
  5. Base Currency

    The first currency quoted in a currency pair on forex. It is ...
  6. Forex Futures

    An exchange-traded contract to buy or sell a specified amount ...
RELATED FAQS
  1. Is there a world currency? If so, what is it?

    T here is no such thing as a world currency. However, since World War II, the dominant or reserve currency of the world has ... Read Full Answer >>
  2. If a country's currency is determined by the strength of its economy, why isn't the ...

    Generally speaking, when Country A's currency is worth more than that of Country B, it does not necessarily mean that Country ... Read Full Answer >>
  3. How can I get a "pensionado" visa to retire in Costa Rica?

    In order to receive a pensionado visa and retire in Costa Rica, a retiree needs to fill out a list of key documents from ... Read Full Answer >>
  4. What are some risks a company takes when entering a currency swap?

    Currency swaps are commonly used to hedge loan transactions. Often, an American company and a foreign company exchange the ... Read Full Answer >>
  5. What are the benefits of engaging in a currency swap?

    Engaging in currency swaps often equates to acquiring additional flexibility. Companies can better exploit their comparative ... Read Full Answer >>
  6. How do I use Trade Volume Index (TVI) to create a forex trading strategy?

    The trade volume index (TVI) indicates whether a security is being accumulated or distributed and is calculated using intraday ... Read Full Answer >>
Related Articles
  1. Options & Futures

    A Primer On The Forex Market

    Moving from equities to currencies requires you to adjust how you interpret quotes, margin, spreads and rollovers.
  2. Forex Education

    Top 8 Most Tradable Currencies

    Currencies can provide diversification for a portfolio that's in a rut. Find out which ones you need to know.
  3. Forex Education

    Play Foreign Currencies Against The U.S. Dollar And Win

    Don't panic when the dollar drops. Learn to exploit the greenback's decline and profit from it.
  4. Forex Education

    Currency Exchange: Floating Rate Vs. Fixed Rate

    Baffled by exchange rates? Wonder why some currencies fluctuate while others are pegged? This article has the answers.
  5. Forex Education

    Dollarization Explained

    Find out how fledgling economies can find some stability in their currency and attract foreign investment.
  6. Bonds & Fixed Income

    6 Factors That Influence Exchange Rates

    Find out how a currency's relative value reflects a country's economic health and impacts your investment returns.
  7. Forex

    Pros & Cons Of Dollar Cost Averaging

    The dollar-cost averaging approach helps investors avoid market timing but they give up some potential for higher returns.
  8. Economics

    Volatility In The Yen Has Brought On Big Changes

    There's a difference between translation effects and the real effects that FX swings bring. We look at the difference, and how it's changing Japan.
  9. Forex Education

    How To Lock In An Exchange Rate

    Currency risk can be effectively hedged by locking in an exchange rate through the use of currency futures, forwards, options, or exchange-traded funds.
  10. Forex

    The Pros & Cons Of A Strong Dollar

    As the U.S. economy has emerged from the Great Recession, the strength of the U.S. dollar has also improved.

You May Also Like

Hot Definitions
  1. Mixed Economic System

    An economic system that features characteristics of both capitalism and socialism.
  2. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  3. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  4. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  5. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center