What year did the dollar begin to float?

The correct response reflects a pivotal moment in the history of international finance: the year 1971 marked the beginning of the dollar's floating status. Prior to this, the dollar was part of the Bretton Woods system established after World War II, which fixed the value of the dollar to gold and other currencies to the dollar at fixed exchange rates.

In 1971, President Richard Nixon announced the suspension of the dollar's convertibility into gold, which effectively ended the Bretton Woods system. This decision allowed the dollar, and subsequently other currencies, to float freely against one another based on market dynamics instead of being pegged to a fixed value. The shift to floating exchange rates has since influenced global economic transactions, trade, and monetary policy significantly by introducing greater volatility and enabling nations to respond more flexibly to economic changes.

Understanding this context is crucial as it illustrates how the monetary system evolved and impacted international trade and finance, shaping the economic landscape we see today.