Euro or dollar — which to choose

What is the difference between the euro and the dollar

All countries, including Russia, have their own Central Bank, whose tasks include regulating and supporting the local currency's exchange rate. As a rule, this is done through gold and foreign exchange reserves. The currencies that make up these assets are called reserve currencies. Each state has the right to decide independently in which currency it will keep its reserves.

Reserve currencies perform the following tasks:

• they are used for investment;
• they are used to pay for export operations;
• they are used to cover balance of payments deficits.

Note.

Central banks rarely decide to choose just one currency — usually there are several.

The currencies chosen as reserve units are those least affected by inflation and freely convertible on the global market. Currently there are several world reserve currencies: the US dollar, the euro, the pound sterling, the Swiss franc, the yen, and the Chinese yuan. The first two are used most often, so we will talk about them today.

What the euro depends on

The euro is the currency used by 19 countries of the European Union, seven countries outside the EU, and two countries outside Europe. The main factor affecting the euro exchange rate is the inflation level in the EU member states. In addition, the value of the currency is influenced by the policy of the European Central Bank and changes in the economies of the EU countries.

What the dollar depends on

The US dollar is the main currency of the United States and a number of other countries. Today this currency is widely used in countries where for some reason national money cannot be used. And since the value of most goods is calculated in dollars, its exchange rate significantly affects the economies of other countries.

The main reason for changes in the US dollar exchange rate is the policy of the Federal Reserve System (the US Central Bank). Another factor is changes in the country's economy.

Why people buy foreign currency

In Russia, goods and services are paid for in the national currency, rubles, so euros or dollars are rarely found here. More often they are bought by people who are forced to leave the country.

In addition, currency is purchased for the following purposes:

• to pay foreign-currency loans;
• for investment;
• to earn on exchange rate differences;
• to pay for goods abroad.

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Which is more reliable — the dollar or the euro

The euro is a relatively young currency used in the countries of the European Union. Despite the fact that the number of EU member states is constantly growing, the number of international transactions, according to SWIFT data at the end of 2019, does not reach even 15% of the total.

At the same time, the dollar is the main currency of the country with the strongest economy in the world. In addition, it is used in 17 other countries. And while the euro has a history of only 20 years, the first dollar coins appeared back in 1794. Moreover, almost all international settlements are made in the US national currency.

Based on this, we can conclude that the US dollar is the most stable and reliable currency for investment.

How to buy euros and dollars more profitably

Most Russians buy currency directly at bank exchange offices, since this method is the most reliable and fastest. However, it has a drawback — organizations often offer not the most favorable exchange rate. Therefore, we suggest using other options:

• use the services of a currency exchange (since the rule of healthy competition applies there, the rate for buying dollars and euros will be slightly more favorable than in banks);
• buy the currency in an online bank — to do this, you will need to open a foreign currency account and buy currency at the current exchange rate.
• Note.If you still prefer to exchange money at banks, we advise you to first study the rate at different exchange offices. You can do this online. For example, on the Banki.ru website.Let's sum up. The dollar is a unit of account in almost any country. The euro, meanwhile, can be used mainly in Europe. In addition, due to relations between Russia and America, the dollar exchange rate will invariably grow, which cannot be said about the euro. Considering these factors, we can conclude that it is now more profitable for Russians to buy American currency.