The devaluation of the dollar is a boon for the United States and the world.
The value of the dollar index, which measures the value of the US national currency against a selected basket of national currencies of specific countries in the world, has reached its lowest level in 2024 AD.
The appreciation of the dollar and the government’s policy of devaluing the national currencies of various countries against it were the story of the years 2022 and 2023 AD.
The increase in interest rates with the decision of the Federal Reserve, which was implemented gradually to combat high inflation in the country, made the dollar more expensive. Concurrently, the Biden economy, relying on investment in production and job creation, attracted a wave of investment from large international companies in the country.
Naturally, this wave led to a search for dollars to convert capital into the national currency, driving up the demand for dollars. This trend benefited American importers and also controlled the prices of some imported goods.
The tourism industry also benefited relatively, as American tourists, with more purchasing power due to their stronger dollar, traveled more to other countries for shopping and sightseeing.
In the meantime, various groups were adversely affected.
One of the American exporters whose revenue from selling goods and services in other countries decreased due to the devaluation of the target market currencies, gradually revealed some of these losses that may have been compensated by other solutions in the quarterly and annual financial statements of some companies.
On the other hand, countries with significant exporters whose target market is the United States may benefit when they acquire valuable dollars. However, countries with weakening national currencies face the risk of capital outflow. Those who have dollars and those who earn revenue in dollars even find investing in the US more profitable than exporting to the dollar country. Thus, developing countries and emerging markets do not benefit from exporting to the US.
Beyond these specific groups, it should be noted that countries with high external debts have faced significant challenges in these years of dollar inflation, and their debts have practically increased by several percentage points.
The painful ways these countries have resorted to in dealing with the crisis, such as deadline extensions and loans on government assets for conversion to dollars, highlight the importance of exchange rate stability on a lower price for developing countries. This also makes industrialized and developed countries more hopeful. Countries like India and Brazil have long been facing fluctuations resulting from the depreciation of their national currency against the dollar.
Brazil, whose economy relies on exports of goods, minerals, and food, has placed special emphasis on the power of exports as the lifeline of its economy.
Among industrialized countries, perhaps no country like Japan has failed to understand the impacts of crises caused by fluctuations in the value of its national currency against the dollar in recent months.
Maximum stability in Japan’s financial markets, with the hope for stability in the value of the yen, is the biggest wish of policymakers and managers in this country. It is also worth noting that trading with national currencies other than the dollar is beneficial for countries that hold the upper hand in economic and political interactions, as they can meet their needs from countries below them using a currency other than the dollar, burdening their national currency on these mentioned countries.
The Chinese business approach has particularly impacted Iran’s income and national capital. In the coming days, the new decisions of the Federal Reserve of America and, more importantly, Jerome Powell’s keynote speech at the major central bank managers’ conference in Wyoming will be of great importance for the value of the dollar and global capital and economic equations.
Persian
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