The U˳S˳ dollar is one of the strongest and most significant currencies in the world˳ On any exchange rate board right next to the British Pound, the Euro, the Japanese Yen and the Indian Rupee, you are likely to see the instantly recognizable US dollar symbol ($)˳
But how is the dollar used outside of the United States? How many countries have a currency that is named after the dollar? And what does it mean to have your currency pegged to the U˳S˳ dollar?
In this post we’ll be highlighting the countries that use dollars, taking a look at currencies pegged to the dollar and exploring how the dollar functions as a worldwide currency˳
- Which Countries Use Dollars?
- Where is the U˳S˳ Dollar used abroad?
- Currencies Pegged to USD
- The U˳S˳ Dollar and Tourism
- Small World
Which Countries Use Dollars?
You probably think of the U˳S˳ dollar if you hear the word “dollar” in any conversation˳ It is one of the most widely circulated and respected currencies in the world˳ The U˳S˳ dollar plays a major role in the worldwide economy and is accepted in cities around the world as a primary or secondary currency˳ The U˳S˳ dollar is also the reserve currency of several countries, which means that it is held by central banks and financial institutions for trade purposes˳
However, the United States is only one among many countries to use a currency called the ‘Dollar’˳ For example, Canada, New Zealand, Australia and Singapore all have their own dollars˳ And while they all carry the ‘dollar’ name they are completely different types of national currency˳ Many of these currencies bear more of a resemblance to the British pound, from which the likes of the Canadian and Jamaican dollar are derived, than the US dollar˳
Economies that use a ‘dollar’ include:
- Antigua and Barbuda = Eastern Caribbean dollar
- Australia = Australian dollar
- Bahamas = Bahamian dollar
- Barbados = Barbadian dollar
- Canada = Canadian dollar
- Fiji = Fijian dollar
- Guyana = Guyanese dollar
- Jamaica = Jamaican dollar
- Liberia = Liberian dollar
- New Zealand = New Zealand dollar
- Trinidad and Tobago = Trinidad and Tobago dollar
Where is the U˳S˳ dollar used abroad?
The U˳S˳ dollar can be found in practically every country in the world˳ It is used in many countries to invest, trade and pay international debt˳ Valuable commodities such as oil and gold are even priced in USD to ensure that other countries can buy them using reserved U˳S˳ dollar currency˳
While the U˳S˳ dollar is used as a reserve currency in many countries, some nations also use it as their own currency as well˳ There are 16 countries and regions that use USD as their official currency:
- Ecuador
- Somalia
- Panama
- Puerto Rico
- El Salvador
- Guam
- Turks and Caicos Islands
- U˳S˳ Virgin Islands
- British Virgin Islands
- American Samoa
- Timor-Leste
- Marshall Islands
- Bonaire
- Caribbean Netherlands
- Northern Mariana Islands
- The Federated States of Micronesia
The strength and standing of the U˳S˳ dollar makes it an attractive option for many countries, especially those that are in the Caribbean and South America˳ Many of these countries are geographically close to the U˳S˳ and will experience tourism benefits by keeping the U˳S˳ dollar as their primary currency˳ This is particularly important for countries in the Caribbean where tourism is a vital part of their economic fortunes˳
For Americans the wide use of the U˳S˳ dollar in tourist hot spots like the Caribbean is ideal˳ They can travel with their own money and not have to worry about local currency exchange˳
The U˳S˳ dollar is used in these overseas countries and regions because it is convenient and valuable˳ The stability of the U˳S˳ dollar compared to many other smaller currencies also enables countries like El Salvador and regions like Bonaire to kickstart their own economic production˳
Currencies Pegged to USD
ç
Currencies Pegged to USD
If countries want to participate in international trade they need to be able to have a relatively stable currency˳ For countries with smaller economies one of the best ways to ensure stability and success is by pegging their currency to a major one like the U˳S˳ dollar˳
As the value of a currency fluctuates during seasons of high tourism or commerce, keeping a fixed exchange with a foreign currency like the U˳S˳ dollar helps to ensure that the local currency remains stable and valuable˳
Today the countries that have pegged their currency to the U˳S˳ dollar include:
- Bahrain
- Belize
- Cuba
- Djibouti
- Eritrea
- Hong Kong
- Jordan Lebanon
- Oman
- Panama
- Qatar
- Saudi Arabia
- UAE
This pegged strategy helps to bring stability to these economies and encourages growth˳ It is important when it comes to international trade and ensures a healthy exchange rate with other nations˳ To learn more about how exchange rates work check out our article on, “Everything you need to know about exchange rates˳”
The U˳S˳ Dollar and Tourism
As we have mentioned above, the U˳S˳ dollar plays an important role for tourism in the Caribbean and Central and South America˳ Some cities and regions will accept U˳S˳ dollars as legal tender even if their national bank chose not to˳
For example, in the Caribbean region of Mexico while the Mexican peso is the official currency you will be able to get by using U˳S˳ dollars too˳ You can pay for services, trade with residents and exchange for pesos easily˳ In fact in many cases because the U˳S˳ dollar is worth more than the Mexican peso it is beneficial for tourist business to accept dollars rather than pesos˳
Transfer Money with Small World
Maybe you have family or friends in countries that also use the dollar˳ You can support them easily with Small World’s international money transfer service˳
Your first digital transaction online is always free of transfer fees!
