What does the term ‘Greenback indicate?

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What does the term ‘Greenback indicate? Blog Image


The rupee weakened sharply against the US dollar recently amid sparse trading volumes as some foreign banks purchased the greenback, likely on account of overseas investors exiting the domestic market.

What is Greenback?

  • A greenback is a term for U.S. paper dollars. 
  • Greenback refers to the first paper money issued by the United States government in the 19th century.
  • It was legal tender by law backed by the United States government. 
  • The issuance was primarily intended to cover up the expenses of the American Civil War.
  • Why is it called Greenback? Since the backside of this paper money is inked in green color, it got the name greenback.
  • Because they were not fully backed by gold, greenbacks lost value and caused inflation in the economy.
  • Even though they were not minted after the nineteenth century, the terminology is now used in reference to the United States Dollar.

What is greenback trading?

  • Traders in the foreign exchange market use the term greenback to refer to the United States Dollar. Hence it indicates the trading in the United States Dollar or U.S. dollar index.


Q1) What is a legal tender?

Legal tender is something which is acknowledged by the laws as a mechanism to settle a private or public debt or in order to meet a fiscal responsibility which includes paying taxes, abiding by contracts, and finally damages or fines. Almost every country uses its national currency as legal tender.

Source: Rupee weakens amid thin volumes on FII outflow, greenback rebound