Economists raise concerns that the US dollar's strengthening causes a threat to the global economy. USD is holding higher ground while its satellite currencies are losing grip. The world is likely to witness a new economic order that shapes its beneficiaries and losers. Aggressive Fed monetary policy triggers a scenario, revealing the reasons for the greenback's rise against the US trading partner’s national currencies. Last week, September 19-25, the US central bank increased its key rate by 0.75% to 3%-3.25%. The regulator confirmed that the rates may rise to 4% by the end of 2022. Nevertheless, the dollar becomes more alluring to investors. Among the reasons, the US energy sector proved to be more resilient than the EU’s one. At the same time, the country’s regulator is succeeding in its fight against inflation at home. Economists warn about the rising risks of a debt crisis. Developing countries use USD to cover their government debt and this may send their economies into a freefall. Developed countries with a debt-to-GDP ratio exceeding 100% may also experience debt policy turmoils, experts warned. The higher the US dollar's exchange rate, the heavier burden falls on other countries, especially the poorest. Against this background, experts fear a new large-scale currency crisis similar to the one that occurred in 1998 in Asia. Higher interest rates add to the risks to the debt sustainability of most countries that use USD to pay for their government debts. At the same time, higher rates push up state budget spending and reduce economic stimulus capabilities. Most countries have become trapped. Against this background, the European Union is suffering from record inflation, China is trying to cope with the real estate market shock waves, and Japan is struggling with rising commodity and raw material prices. The US economy is also under pressure amid the falling income of domestic corporations located abroad and declining exports. An alternative to the dollar could be gold, which has proven itself to be a safe-haven asset. The world will start to build a new economic development model, experts concluded.
Global inflation may reach double digits
According to Bloomberg Economics, global inflation is currently at the peak of 9.8% year-over-year. However, the figure may slide to 9.5% by the end of 2022 and 5.3% in the second half of 2023. Bloomberg Economics reports that global inflation is close to its peak. However, a gradual retreat from multiyear highs reflects major central banks' concern about consumer prices.
10:08 2022-12-08 UTC+00
OPEC+ ready to take 'immediate' action to stabilize oil market
OPEC+ stands ready to take more action to stabilize the currency and commodity markets. The alliance has reportedly agreed to meet at any time if necessary.The participating countries reiterated their readiness to stay in touch and "take immediate additional measures to address market developments and support the balance of the oil market and its stability if necessary.
09:27 2022-12-08 UTC+00
Gasoline prices in US down to pre-Ukraine conflict levels
US President Joseph Biden has recently posted on Twitter that gas prices in the US are down back to levels they were before the conflict in Ukraine. The American leader noted that the cost of a gallon of gasoline dropped by $1.5 from the summer peak. Currently, the average price per gallon is around $1 at most gas stations in the US.
09:09 2022-12-08 UTC+00
US relaxes sanctions against Venezuela
The return of the opposition and the government in Venezuela to the negotiation table was a key condition for the easing of sanctions by the United States. The move allowed Chevron, one of America’s largest oil companies, to resume production in the Latin American country. Still, there presumably could be another reason for that, which is oil shortages in the global energy market.
13:38 2022-12-07 UTC+00
Oddly, G7 settles Russian oil price cap at decent levels for Kremlin
The fierce debates among the EU leaders about the Russian oil price cap have eventually produced an agreement. The policymakers could not come to the common denominator ahead of the winter. Besides, Russian crude oil had already been sold at a huge discount. The EU authorities were poised to set the price cap at $65-70 a barrel.
13:26 2022-12-07 UTC+00
US stock market far from bottom
Now, there is no reason to worry about the stock market. Most analysts share the same view on the situation. They suppose that the market has not reached the bottom yet and the recent lows could hardly be called record ones. In other words, there is room to decline. “We're nowhere near a market bottom,” economist David Rosenberg said.
12:36 2022-12-07 UTC+00