in response to the Federal Reserve’s resolve to keep raising policy rates for longer to regain control of stubbornly high inflation. This has far-reaching consequences. The US dollar is prominently used around the world as an international medium of exchange and as a global reserve currency.
The dollar is strengthening as Africa is already being hit hard by rising inflation triggered by war in Ukraine. As dollar power increases, it is amplifying inflationary pressures across the continent. That’s making it even more difficult for central banks to tame high inflation. Additional pain will be felt as the dollar’s strength ripples through Africa, causing a squeeze on trade volumes, tighter trade financing conditions and burgeoning sovereign debts alongside surging debt-servicing costs.
They could keep raising interest rates to fend off currency depreciation pressures from the strong dollar. But, in doing so, policy makers face a difficult balancing act as lifting rates must be carefully calibrated to avoid spurring an economic downturn. An alternative option is to try to contain currency depreciation pressures by intervening in the currency market using foreign exchange reserves. That’s also challenging. Many African countries have seen their surplus reserves depleted after large pandemic-spurred public spending support programmes and more expensive payments on their commodity imports.
The index has appreciated by about 10% since March, as Fed officials are laser-focused on fighting inflation.
_Business But. But. The dxy?
_Business The true story : Black power Africa love debt,they can't help themselves. Africa is lazily unproductive & can't produce locally because of unsustainable labour costs,stupidly of course they will blame the west!
_Business Maybe this is also a factor.
_Business Blame everything on the war in Ukraine... Bullshit. 🚀☮🇿🇦