The Wall Street Journal came out with an interesting article claiming the dollar is still the “King of the Black Market”. Black markets are often not talked about among normal urban population in the U.S. and other Western countries, however, in some countries, the black market is all that is talked about. In countries such as Venezuela where the currency is pegged to the U.S. dollar many people keep extra reserves. This is because often this arbitrary level set by the government does not reflect the true market value of the currency. And, if the currency were to crash, the dollar would still retain its true value. Black markets are often used for multiple things such as the purchase of illegal entities, purchase of legal but restricted entities, etc. However, all of this “stuff” must be bought by some type of currency. In the past that currency has consistently been the dollar as it was considered the safest currency in the world as well as the known international currency. The black market is heavily dependent on selling their “stuff” for a currency in which they know they can use. So the fact that the dollar has been used in the past shows a great deal of faith in the dollar.
There has been speculation recently that the euro is beginning to infringe on the dollar as the safest currency in the world, as the U.S. dollar has been continuously losing value. The euro is currently the second most traded currency in the world. Ports and Richards, scholars from Dartmouth and the London school of business claim, “The introduction of the euro, greater liquidity in other major currencies, and the rising current account deficits and external debt of the United States have increased the pressure on central banks to diversify away from the US dollar” . It would only seem safe, right? However, the black market still deems the dollar the “it” currency. One man claimed to the Wall Street Journal, “Take out a dollar bill in the remotest place in world and people will recognize it”. This still says something about the dominance the dollar has on the international market. Alhaji Farouk Suleman the president of the Association of Bureaux de Change Operators of Nigeria, a group for black market traders in Nigeria exclaimed, “The exchange rate might not be good, but you know what you’re dealing with and that you can use the dollar anywhere you go. I don’t see any real shift towards the pound or euro.” Most people in the Western World would not realize what an importance the dollar has to some people in these African countries, yet the dollar is a profound instrument for many people’s livelihoods.
If the dollar continues to dominate the black market, it shows that the people, who depend most on the safety of a currency, still believe in the dollar. With their support and belief in the dollar, rumors that the euro could soon be replacing the dollar as the international currency are really just …mere rumors.
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