US Dollar vs. Euro: What's the difference?

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Difference between US Dollar and Euro

The US dollar is still by all accounts the driving force of the world economy, with most financial markets accommodating it to some degree. Nevertheless, the impact of the Euro cannot be denied, and as it turns out, the venerable dollar may have some stiff competition from the fledgling currency in the coming years…

US Dollar
Euro

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The US dollar is the official currency of the United States, and it is typically abbreviated with the dollar sign: $. Depending on usage, the US dollar may also be designated by “US dollar” or “US$” in order to set it apart from other dollar currencies that also use the "$" symbol. The US dollar is made up of 100 cents.

As mentioned previously the US dollar is still the de facto currency used in most transactions all over the world, and it is also one of the international reserve currencies, with many countries other than the United States even using it as the official currency. Some British territories in particular use the US dollar as the local currency.

The Euro is designated by the € sign, and it is the official currency of 16 of the 27 states of the European Union. At present, the Euro is used by as many as 327 million people all over Europe, and it is the second largest reserve currency in the world. The Euro is in fact the second most traded currency after the US dollar.

Perception

The most basic difference between the two is that the US dollar has been around for a lot longer than the Euro. This gives most people the impression that it is a more reliable currency. The truth of the matter however is that the Euro is almost as stable as the dollar, particularly since it is backed by the European Union. In fact, even now, the Euro is gaining a perception of more stability, given its ability to weather most recent financial crisis around the world. Nevertheless, the US dollar is still the currency that has the most drawing power.

Predications

Many financial analysts predict that the Euro will continue to gain ground over the US dollar in the coming years, with its increasing role as the premier reserve currency. It is interesting to note however that the recent financial crisis that hit in late 2008 caused many to turn to gold and other commodities, which led to a subsequent boost in the strength of the US dollar and the Japanese Yen. This period saw an increase in the value of the US dollar versus many other currencies including the Euro. In 2010, we are seeing movement in Germany to reject the Euro and go back to the Deutchmark because of perceived undue strain on the Euro in the wake of bailing out the Greek government and with expected problems after the acceptance of Romania into the union.

That being said, many countries (China, Russia and India among them) have signified an interest in the implementation of changes in the international monetary system. These moves have been explored cautiously however, so as not to cause a collapse in the value of the US dollar, which will have serious implications in their dollar investments as well.

Similarities and Differences

US dollar

  • The official currency of the United States
  • Still the de facto currency used in most transactions all over the world

Euro

  • Second largest reserve currency in the world
  • Second most traded currency after the US dollar

Which currency is stronger?
  • US Dollar
  • Euro
 
 

Discuss It: comments 2

how much is a dollar to a euro

  • Guest
  • Khalida wrote on March 2014

Let's say I bring 1,000 $ in France for a 3 week vacation. When I want to spend 300 euros in France, how much would I be wasting?

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