Racing Dollars: 10 Buzz Ways You Should Be Pang Eighteen

 Tuesday, July 26, 2022

       US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. — Reuters

FRANKFURT: All things to all people, the US dollar makes its mark in every corner of the global economy: it is the currency in which important raw materials are bought and sold, and it is the safe haven to which investors flock. Refer to the time of . .

The greenback is now at a 20-year high against other global currencies, thanks to expectations that the Federal Reserve will raise interest rates faster than most.

Here are 10 answers you should follow:

Americans Abroad

A strong dollar is great if you're an American tourist. Hotels, food or a designer bag are all cheaper, whether in London, the French Riviera or Cancun. It goes without saying that the reverse is true for a traveler to the United States – unless they bought their Disneyland ticket or Las Vegas junket a little while in advance, it will cost more.

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This is a welcome added bonus for Americans traveling to one of the 19 countries that use the euro, and a small consolation for European tourists in the US. No more mental math needed to convert between dollars and euros - you can just call it one for one.

Content in the US

For buyers around the world seeking top U.S. brands, the strong dollar means they can pay a premium for them unless local distributors try to mitigate the currency's impact. Just the other day, U.S. companies such as Metal Inc. — maker of Barbie dolls and Hot Wheels cars — said it was being hit by the stronger dollar, even if overall consumers were willing to accept higher prices. Look. For consumer goods giant Procter & Gamble - maker of everyday products such as Pampers or Ariel - a rising dollar always has a similar effect on its sales.

Emerging Trouble

For Argentina, the rise of the dollar against the peso meant a doubling of local prices in just one year and a deepening economic crisis. Governments and businesses in many emerging economies finance themselves by issuing bonds denominated in US dollars. The amount owed to them has now increased in value when measured in their local currency. Tapping the market for more credit has also become more expensive as US rates have risen.

raw material

Countries like Turkey and Egypt, which import much of their raw materials, have suffered a double whammy. Most commodities, from oil to wheat, are priced in US dollars, meaning they are paying more for each barrel or bushel in their local currency. It comes as prices for many of these materials are already at multi-year highs due to the aftershocks of the war in Ukraine, extreme weather and the COVID pandemic.

Home support

A stronger dollar is good news for people in poor countries like Mexico and Guatemala who rely on remittances from relatives working in the United States. These remittances took a severe hit in 2020 as a result of COVID-19 but have since seen a steady recovery.

Inflation

Even for rich countries like Germany, a strong dollar can be problematic as it helps fuel already record-high inflation through more expensive imports. Local central banks have typically responded by raising interest rates, making debt more expensive and slowing economic growth.

The ruble rally

The Russian ruble is the only world currency in the black against the dollar this year - an unexpected result for the country under international sanctions over its invasion of Ukraine. But this power—an artificial consequence of foreign exchange controls—does little for the ordinary Russian. Moscow may be making tens of billions of dollars a month selling its energy to the West, but Russian households still can't get their foreign currency savings back. And many Western brands, from Adidas to H&M and Ikea, have stopped selling in Russia since the war began.

Bitcoin

Marketed as the ultimate shield against inflation, the world's biggest cryptocurrency has not lived up to its promise and has more than halved this year despite consumers fleeing prices in large parts of the world. Legions of individual investors attracted to crypto during last year's bull market have now ditched digital tokens to park their savings in the U.S. currency, which they consider safer — and which is now starting to pay interest again. Is.

increase

If hamburger prices are anything to go by, the dollar may indeed be very strong and bound to fall back. The Economist's Big Mac Index, which compares the price of burgers around the world, shows that the greenback is overvalued against all but a handful of currencies. The dollar is the most expensive in Venezuela, Romania and Indonesia — and a Big Mac is the cheapest for an American traveler. The opposite is true in Switzerland, Norway and Uruguay.