Will the world continue to acquire the greenback during the coming decades within the framework of the financial and monetary policies that some countries follow in dealing with their local currencies in the global trade?
Since the beginning of the Russian-Ukrainian war, we have followed some decisions of the Russian government to price its oil and gas exports with the "ruble."
There was talk that Saudi Arabia would price its oil sold to China in the Chinese yuan, and that Russia, China and Iran would conduct trade deals in their local currencies. There is no doubt that such decisions will have some negative impacts for the US currency in the long run, especially if oil producing and industrial countries in Latin America, Asia and Africa adopt these policies as well.
In the interim, the US currency will continue to have its strength in the global economy, and in international trade, especially in the pricing of some vital raw materials, while there are many countries in the region and abroad that set their annual financial budgets based on the US currency. Many investors take sanctuary in the US dollar during times of turmoil in the world.
Recently, the US dollar has witnessed an increase in its value in comparison with other currencies as a result of the Federal Reserve Board raising the interest rate in response to inflation witnessed in America and other countries in the world.
On the other hand, the rise in the values of local currencies, such as the dollar and any other global currencies, helps tourists obtain better exchange rates when purchasing local currencies. This reduces their travel expenses.
But local products manufactured in those countries are affected as a result of their high prices, and thus industries will be impacted as well. During the past period, some US industries witnessed a decline in sales, while requiring consumers to pay larger amounts to buy them.
Any rise in local currencies has adverse effects on sales, especially in countries that depend on the major currencies in the world such as the dollar, euro, yen and other well-known currencies. This is what we find today in global markets and their impact due to the lack of liquidity, and the high cost of borrowing due to high interest rates, as is the case in the US. We also find in the world that the values of primary commodities and raw materials are witnessing a significant increase due to the high prices of oil and gas besides wheat, most of which are priced in the US currency. While such goods are costlier, it has positive benefits for foreign workers who can remit more to their countries of origin.
Recently, the value of the Russian currency shot up as a result of the decision to sell Russian oil and gas, which helped it achieve many financial advantages.
This decision comes due to the sanctions imposed by the US, as well as European countries, on Russia due to the crisis with Ukraine.
Moscow is earning tens of billions of dollars per month from energy sales to consuming countries.
These decisions will have negative effects on transactions in US dollars in the event that other countries decide to price their important products in their local currencies.
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