The currencies from Kuwait and Bahrain and Grand Cayman are more valuable than the U.S. dollar, the British pound, and the euro usually if not always as of late.  Why aren’t more currencies greater in nominal value?

True, nominal variables should not matter past the short run, but that does not answer the question.  Why don’t some countries denominate above USD, and then boast to their misled citizenries about having created “stronger” currencies?  Is that what a few possibly status-hungry smaller nations have done?  Or is the status quo merely an accident of history?

Or is there some structural reason why the USD is relatively strong?  Was not the Indian rupee once at par?  Maybe part of the mystery is that we Americans have, by global standards, a lower than average inflation rate.  But why is it (currently) about 140 Japanese Yen to the dollar?

Might it be that other

Keep reading this article on Marginal Revolution.

Leave a Reply