The top Urdu news nowadays would be the US dollar hitting its record high level in Pakistan, of Rs 173.57, making the entire nation dive into economic crises once again. The dollar has been the world’s most significant currency since the end of World War 2. It is foremost extensively held reserve money within the world. As well because of the most generally utilized currency for international trade and other activities.
The dollar’s dominance within the global economy provides the US with a variety of benefits. Including the power to borrow money more easily abroad and therefore the ability to expand the reach of US financial penalties.
However, experts believe that dollar dominance comes at a price. Increased international demand for US bonds raises the dollar and reduces the competitiveness of US exports. Leading to trade deficits and employment losses. The dollar’s significance in many global transactions also pressurizes the Federal Reserve of the United States. To act as the world’s bank of last resort amid economic crises like the one caused by the coronavirus outbreak.
Dollar’s impact on Pakistan’s economy
Many of us are now seeing a hike in petrol price, which further increases transportation cost. As a result, every item that we need to buy is expensive since the economy is crippling. This shows how the dollar has a great impact on our economy. Since we are unable to cope with it being constantly spiking up.
Why does the US dollar climb up
The economy’s performance influences whether or not to buy or sell dollars. A strong economy will draw investment from around the world due to its recognized safety and ability to produce a reasonable rate of return on investment. An increase in investment, particularly from overseas, provides a strong capital account and a high demand for dollars since investors always seek the highest payout that is predictable or “secure.”
Consumption in the importation of items from other countries in the US causes money to leave the country. We will have a current account deficit if our imports are bigger than our exports. A strong economy can help a country counterbalance its trade deficit by attracting foreign capital. As a result, the United States may continue to serve as the world’s consumption engine.
Technical Factors that Impact the Dollar
Traders must know whether the supply of dollars will surpass or fail to meet the demand for dollars. To aid us in determining this, we must keep an eye on daily news or events that may have an impact on the dollar’s value. This involves the publishing of various government statistics such as payroll data, GDP data, and other economic data that might assist us in figuring out whether the economy is strong or weak.
What are the causes of the domestic currency’s devaluation?
As we are discussing the value of the dollar in today’s Urdu news in Pakistan, you’ll get to know why our domestic currency is devaluing. It’s because the exchange rate is monitored by the relative demand and supply of domestic and foreign currencies, just as the prices of two or more products. When demand for a foreign currency, for example, the US dollar, outnumbers supply, the foreign currency appreciates, causing the home currency to depreciate.
According to top Urdu news, when a country imports more than it exports, the demand for foreign currency exceeds the supply, causing the native currency to devalue. If capital withdrawals exceed capital inflows, the outcome will be identical. As a result, when an economy’s balance of payments is negative, it’s likely to have a weak exchange. The rupee continues to fall in the foreign exchange market as Pakistan continues to run a current account deficit.
The only way to keep the country’s currency steady in a managed floating exchange rate system, as Pakistan and most other economies have, is to pump foreign currencies into the market. The selling of foreign currencies, on the other hand, depletes an economy’s foreign exchange reserves.
It’s simply a matter of time before the central bank’s foreign exchange reserves run out. It’s no longer possible to maintain an overvalued exchange rate. As a result, the domestic currency loses a significant amount of value. This is what happened in Pakistan when the currency stabilized for three years.
The dollar’s current position is expected to last for some time. We can only hope that it falls soon so that Pakistan’s faltering economy might be saved.