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The United States has always been at the forefront in terms of dealing with problems in the global economy. The US dollar has always been a haven for almost all the economies of the world. Predominantly most nations across the globe use the US dollar as a medium to pay import/export bills. The current times are more of a severe global economic crisis, coming in close after 2008 when the world went into a severe recession. The world is now on a precipice of a slowdown and a recession, and it is hard to say how the world economy would fare by the end of this year or by the beginning of next year's first quarter.
US dollar- impact on the domestic market
The domestic market has seen a significant scene of major developments across industries and consumers. In terms of the investing front from foreign nations, it's proving to be extremely risky and cautious. Considering the earnings, of the corporate players, it is said to be a threat, making their products expensive in the market. It is affecting the earnings and also affects the consumption pattern in the economy.
Trade is said to be significantly impacted due to the current trends, leading to deficits from the US trading counterparts. This would add pressure to the levels of deficit incurred during the trade. To counter the growing dollar value, the currency interventions, it seems to be very difficult to gain more from world trade. Domestically, there is an issue of rising prices of commodities. It adds to the increase in terms of the cost of living. There is a high level of mortgages, stocks, and bonds, which makes the domestic market more volatile and unpredictable.
US dollar- impact on the world economy
The world economy is in a desperate move to save its own currency. Many revisions of their interest rate change to keep up with the growing strength of the dollar. Trade is said to become extremely expensive, and many nations at present continue to face the issue of trade deficits. Another fear for many nations is the recession in the economy. With the massive slowdown in many sectors and low consumption, there is strong anticipation of a recession, which could slow economic activity.
The imports and exports have taken a major hit considering the rise in costs and the strong dollar is adding pressure to poor and developing nations across the globe. Adding to all these investments in nations with potential for growth stare at the abyss. The increasing interest rates make the dollar more exciting as an offer to invest in America, making the emerging markets lose out. It is invariably affecting the economic growth of nations across the spectrum.
How can the situation be saved???
It is only a matter of time before the United States looks into the repercussion of conserving its currency value and its fight to keep inflation in control and keep the interests of its international counterpart in its foresight. The consequences would be a herculean task to repair and get back on track, considering the recession fears looming in the economy.
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