In 1944, when Europe and most of Asia were in ruins, a quarter-century conference was held in the resort town of Bretton Woods that determined world currencies, where the US dollar was chosen as the reserve currency. The currencies of other countries were equated to the dollar, and the dollar itself was equated to gold, at a ratio of $ 35 per troy ounce. Such an agreement at that time seemed quite fair, since the United States had 70% of all world gold reserves and, thanks to the Second World War, gained a leading position in the world.
The Bretton Woods monetary system lasted until 1971 when US President Nixon unilaterally withdrew from the agreement, and on March 16, 1973, an agreement was signed known as the Jamaican Agreement, which formed the FOREX foreign exchange market. According to the Jamaican Agreement, exchange rates began to be determined by supply and demand. At the same time, the dollar, to this day, remains the main reserve currency and occupies a leading position in payments for energy, goods, and gold, as well as the main currency used in numerous financial instruments.
The current position of the American currency is very well described by the word “petrodollar”, and the main volumes of commodity trade, including oil and gold, are traded on American exchanges such as NYMEX, COMEX, CME, and ICE. The USA leads in terms of trading volumes of oil, gold, grain and many other goods, and commodity resource quotes are determined in US dollars: – oil / dollar (WTI / $), gold / dollar (GOLD / $), wheat / dollar (Wheat / $ ), corn / dollar (Corn / $), coffee / dollar (Coffee / $), etc.
To determine the value of the product market or product groups, there are various product indices. The most famous of them are Thomson Reuters / CoreCommodity CRB Index (CRY) and Deutsche Bank Commodity Index, calculated by the price parameters of futures traded on the above exchanges (Fig. 2). The exception is the price of aluminum and nickel, which is determined by the quotes of the London Metal Exchange, but again, by quotations in US dollars. Gold prices are also determined in US dollars.
At the same time, foreign currency quotes are also recalculated through the dollar: euro / dollar (EUR / USD), pound / dollar (GBP / USD), dollar / franc (USD / CHF), dollar / ruble (USD / RUB), dollar / yen ( USD / JPY), etc. Various US dollar indices are used to estimate the value of the dollar against a basket of foreign currencies.
The most famous of them is the US Dollar Index (USDX) calculated in relation to a basket of six currencies: Euro (57.6%), Japanese Yen (13.6%), British Pound (11.9%), Canadian Dollar (9.1 %), Swiss franc (3.6%) and Swedish krona (4.2%). The reference point for this index is 100% of the value of the US dollar as of 1971. Thus, the current quotation of index 97, indicates that the US dollar, in relation to the basket of the above currencies, is 97% of the level of 1971. A completely minor change in 48 years! However, this was not always the case, and over previous years the index changed significantly, from the level of 70% in 2009 to the level of 128% in 1985.