Jumbangla Desk: Globally, the price of the dollar is increasing. On the contrary, the currency of different countries is depreciating. The increase in the exchange rate of the dollar affects various sectors of the economy.

Dollar

The appreciation of the dollar in recent years has had a significant impact on multiple sectors of the country, from the import sector to the export sector, consumer spending and inflation.

According to economists, the rise in the value of the dollar is beneficial in some cases, but in most cases its harmful effects are more visible.

As the dollar appreciates, domestic exporters can earn relatively higher profits. Exporting goods to foreign countries earns money based on the value of the dollar, so when the price of the dollar increases, the amount of money earned by exporting goods also increases.

Countries like Bangladesh i.e. those who earn foreign exchange through export of ready made garments industry and agricultural products can benefit from this. This may increase the country's foreign exchange reserves.

However, when the value of the dollar increases, the cost of imported goods also increases. Especially in energy, food products and raw materials sectors have significant impact. Bangladesh is dependent on the dollar for imports such as oil, gas, raw materials and other commodities. In that case, the increase in the price of the dollar also increases the cost of imports. As a result, the cost of goods increases and business costs also increase.

The Times of India reports that the US dollar is the leading global currency. However, along with the US Dollar, the Euro is popular and the two currencies are more prevalent in the international market.

The share of the US dollar in terms of foreign exchange in international banks is more than 64 percent. The euro is about 20 percent. The dollar reflects the strength of the US economy.

The US dollar is used in 85 percent of international trade, including crude oil. Around 40 percent of global loans are approved in dollars. Most of the world's 180 or so other currencies are used within their respective countries.

We often talk about commodity prices. Remember that if there is not enough product, the price goes up. There is a gap between demand and supply. When the money supply in the economy is high, but we don't get what we want, the purchasing power of the currency against the dollar decreases.

When something is in high demand, it is natural that its price will be high. Due to high demand of dollar in the international market, the price of dollar is also increasing. Countries that import more than exports tend to spend more on imports than they earn on exports. If the value of the dollar is higher, the import costs of those countries increase.

The value of the dollar affects the common man. You are still making the same amount you were earning before the dollar appreciated or before the currency depreciated. They can buy the same amount of goods or services as before. But, what is it really?

This is not the case at all. A rise in the value of the dollar means a fall in the value of its own currency. It affects common people. When the price of dollar increases, crude oil has to be imported at a higher cost.

Are prices only increasing fuel costs for private car owners? It is not. A rise in oil prices also increases the cost of transportation of essential commodities including vegetables, edible oil and food grains. As a result, the prices of those products also increase. It affects common people. This pushes a country towards inflation. Foreign exchange reserves decrease.

The ability to import other essential commodities continues to decline as extra dollars are spent on crude oil. Due to this, foreign goods become expensive in import-dependent countries.

A rise in the value of the dollar or a depreciation of the rupee makes overseas education and travel more expensive. Tuition fees and flight tickets are to be paid in dollars. Have to spend extra money.

Another question may come, why the price of the dollar is rising? The war in Ukraine is the main reason for the increase in the value of the dollar and the fall in the value of the rupee.

Russia is the world's second largest crude oil exporter. Oil prices also rose as supply was disrupted by the war.

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As foreign portfolio investors pulled money out of the stock and bond markets, currencies fell and the dollar rose.

The question is - who determines the value of money against the dollar? Bangladesh government? United States? Or someone else? Actually no one does.

A rising dollar may be a source of relief for some. For example: Bangladeshi immigrants living in USA, UK, Australia, UAE or other countries send dollars back home because of the exchange rate, their families get more money.

Currency depreciation helps exporters get more money against the dollar. Simply put, it increases the purchasing power of foreign buyers. Source: Meaning