I don’t know if you have heard of the “dollar smile curve”, which is a term put forward by Morgan Stanley’s currency analysts in the early years, which means: “The dollar will strengthen in times of economic downturn or prosperity.”
And this time, it was no exception.
With the aggressive interest rate hike by the Federal Reserve, the US dollar index has directly refreshed a new high in 20 years. It is not an exaggeration to describe it as a resurgence, but it is right to think that the domestic currencies of other countries have been devastated.
At this stage, international trade is mostly settled in US dollars, which means that when a country’s local currency depreciates sharply, the country’s import cost will rise sharply.
When the editor communicated with foreign trade people recently, many foreign trade people reported that non-US customers asked for discounts in the payment negotiation before the transaction, and even delayed payment, canceled orders, etc. The fundamental reason is here.
Here, the editor has sorted out some currencies that have recently depreciated greatly. Foreign trade people must pay attention in advance when cooperating with customers from countries that use these currencies as their currency.
1.Euro
At this stage, the exchange rate of the euro against the dollar has fallen by 15%. At the end of August 2022, its exchange rate fell below parity for the second time, reaching the lowest level in 20 years.
According to estimates by professional institutions, as the US dollar continues to raise interest rates, the depreciation of the euro may become more serious, which means that the life of the euro zone will be more difficult with the inflation caused by the devaluation of the currency.
2. GBP
As the most valuable currency in the world, the recent days of the British pound can be described as embarrassing. Since the beginning of this year, its exchange rate against the US dollar has fallen by 11.8%, and it has become the worst performing currency in the G10.
As for the future, it still looks less optimistic.
3. JPY
The yen must be familiar to everyone, and its exchange rate has always been on the cusp, but unfortunately, after this period of development, its embarrassing dilemma has not changed, but it has broken the record in the past 24 years, setting a record within this period of time. the all-time low.
The yen has fallen 18% this year.
4. Won
The South Korean won and the Japanese yen can be described as brothers and sisters. Like Japan, its exchange rate against the dollar has fallen to 11%, the lowest exchange rate since 2009.
5. Turkish Lira
According to the latest news, the Turkish lira has depreciated by about 26%, and Turkey has successfully become the world’s “inflation king.” The latest inflation rate has reached 79.6%, which is a 99% increase in the same period last year.
According to the local people in Turkey, basic materials have become luxury goods, and the situation is very bad!
6. Argentine Peso
Argentina’s status quo is not much better than Turkey’s, and its domestic inflation has reached a 30-year high of 71%.
The most desperate thing is that some experts believe that Argentina’s inflation may surpass Turkey to become the new “inflation king” by the end of the year, and the inflation rate will reach a terrifying 90%.
Post time: Oct-17-2022