Many experts sided with Nirmala on the dollar-money move
This time: Union Finance Minister Nirmala's comments in the United States “The value of money is not falling. The dollar continues to strengthen in my eyes. All currencies in the world have to fight against a strong dollar” - the clamor around the country. Then the opposition jumped in to criticize Nirmala and cover up the economic failure of the central government in the last 8 years.
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But did Nirmala really say something wrong?
Experts claim, "didn't say". They and the IMF's latest documents say the dollar has never been higher since 2000. The dollar has gained 13% against the euro since the start of this year, 22% against the Japanese yen and the British pound, and 6% against emerging market currencies overall, despite a surge in inflation and multiple headwinds in the US economy. There will be price of money, that is normal.
How strong has the dollar been?
According to IMF statistics, the currencies of developed countries such as Europe, Japan, Great Britain, Australia, Korea, Canada, and developing countries including China, Malaysia, South Africa, and about 1 dozen countries have become "weaker" due to the rise of the dollar.
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According to economists, almost every country in the world has a huge trade with the United States. As the dollar rose to a peak, the exchange rate of the dollar against the respective country's currency naturally rose. Of course, keeping the dollar rate under control as much as possible is an important task of the government of all countries. But the way the value of the dollar is increasing this year, it is better to say impossible if not difficult to match it.
At the same time, they are saying that the Indian currency has collapsed due to the failure of the center to rise in the dollar, the country's economy has fallen to the bottom, the picture that the opposition is trying to portray is not correct. As with the dollar, numerous other catalysts work behind the price determination of money. Most of them are suffering from anemia due to the outbreak of corona epidemic for two consecutive years and the Russia-Ukraine war since last February. For a country like India, which has to import the bulk of its energy, and whose overall imports are always higher than its exports, it is virtually impossible for a country like India to control all this and keep the taka 'stronger' against the dollar. Trying to gain political advantage by bringing the center to the table is just a gimmick.
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How is the dollar rate determined?
The dollar rate in the world market is determined by the dollar index. Which is determined by multiplying the euro, British pound, Japanese yen, Canadian dollar, Swedish kroner and Swiss franc by specific ratios. The value of the dollar has continued to rise due to the devaluation of the developed countries' currencies. It is easy to imagine that the Indian rupee will hold its head high in front of the dollar if it weathers all those storms.
Is money doing better than the rest?
The rupee fell 2.6% against the dollar in September. But it should also be borne in mind that, with the exception of the euro (-2.4%), the currency's performance over the same period is remarkably good. During this period, the British pound and the Korean won fell by 6% against the dollar, while the Australian dollar fell by 4.8%. Swedish kroner (-4.6%), Chinese yuan (-4.1%) and Philippine peso (-4.1%) fell. So, whether the Center should be bound by Nirmala's statement, or whether the Center should be applauded for the Indian rupee, is debatable.
