Why is the dollar symbol an S?

The letter "S" does not appear anywhere in the word "dollar", however, it is this letter with a line through it ($) that forms the dollar symbol. But why an S?

In the 1530s, Spain possessed more silver than any other country because of the American conquests. At that time, the real of a 8, also called peso of eight or Spanish dollar, had great force and was being used everywhere in the West Indies.

The strength of this coin influenced the names that would later be granted to many American currencies. For example, eight Latin American countries call their currency "peso", and the US currency "dollar", also comes from the Spanish currency ("Spanish dollar").

With all this, the current symbol of the dollar ($), does not come from the word "dollar", but from "peso", or rather, "pesos".

In those days when account books were written by hand, simplification was an effective way to save time. One of the biggest lyrics used in these books was "Ps", which meant "pesos". Well, somebody thought to put the two letters together, with something that resembles the current dollar symbol.

And because the US dollar was named after Spanish, the same peso symbol was finally used to refer to both pesos and dollars.

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Reference:
io9