“Currency
Wars or Cooperation? The Dollar’s Declining Dominance”
Written
by: Ayesha Asif
Ever
wondered, how the climate change, globalization, inflation, global warming,
economic and financial instability, redeem changes in a country, conflicts,
violence, genocide, racism and other factors are affecting this earth? The
change in weather conditions are quite sudden and similar to how the global
situation changes in this post-modern world of 21st century, rapidly
and furiously. The universe reached its highest level in various fields and has
upgraded the lifestyle of humans with the advancement of technology but a tip
of ups and downs may create chances of currency wars and fluctuation in
stability. The altering global situations influence the economic backbone of
the nations which has got direct connectivity with currency, import and export,
stability, inflation and cooperation between countries. According to Dave
Ramsey, “You will either learn to manage
money, or the lack of money will manage you.”
The
term ‘currency war’ holds a staggering process inside it to demonstrate the
ways of increasing exports of a country by making currency cheaper for
increasing the sales and profit rate. This war of notes and coins invade into
the action when structural and diplomatic bodies try to lower down the prices
of several products at the exact, similar point, which could turn out to be
non-beneficial and insufficient most of the times, resulting into ‘not a win
securing’ scenario. This could heat up the ‘already unstable economy and
policies’ of the country. Nations are engaged in devaluing their currencies for
the sake of boosting their exports. This devaluation of currency ends in
converting imports more expensive, creating a rising tension of inflation and
leading towards trading barriers. Economists view this currency war as harmful
because if the devaluation of currency continues for a longer period of time,
then circumstances could turn worse due to the adverse consequences and
increased protectionism which could trigger economic instability at the global
level.
Ever
conjectured, why dollars are considered as the core currency in most part of
the world? The reason is quite clear and realistic! Most of the petroleum
products, refined crude oil, diesel, and major imports and exports are held
through dollars and majority of the countries make their deals, purchase and
sell their products using dollars. But the recent decline in the dominance of
dollars could be the end result of shaking trust issues between America and
other countries. Many nations often think; “What if someday we go against USA?”
This is the reason that several nations couldn't think of being an opponent of
the USA because if they go against the superpower, they couldn't incorporate
themselves into international relations completely, even not partially, as almost
all deals are locked in this world through dollars being paid in exchange. This
results in shaken trust factors. For these nations, saving money in dollars is
never a safest option. They seek ‘Yuan’ as a backup option for restoring their
declined trust factor. China's currency "Yuan" is being promoted
against the dollar with China rising their exports with a will of replacing the
dollar and many countries are supporting Yuan to become the next dominating
currency of the world, resulting in becoming a threat for dollar dominance in
the world.
On the other hand, still many people living in the
same world, often believe that the 'dollar' currency will always be a
dominating currency in the world which makes them think in a dimension that
they keep their savings in dollar currency, letting their intrusive thoughts
win over objective and factual data. But the world dimension has started
changing after the "almost happening" World War 3 between Israel,
America and Iran which resulted in a cease fire, luckily, rescuing everyone
from massive destruction of the world and its people. But the superpower
"America" couldn't rescue their status of being the most powerful, compelling
and controlling nation in force, influencing every single Asian state. Their
status gradually shifted when Iran, even after not being an atomic nation,
showed what they are capable of doing against forces like America and Israel.
The recent ceasefire made the declining value of the dollar stable up to a
certain level by lowering the geopolitical tension. This whole global situation
shifted the mindset of individuals and created a breakage in the firm line of
trust that the leaders of several countries used to do in America, also
affecting the worth of dollars significantly. This decline reflected the
structural shifts in governments and authorities’ mindsets, promotion of trade
and commerce through local currency, influence of other rising currencies like
Yuan, reduced total reliance on dollar and inflation. This whole situation was
not in favor of America or its dollars but it must have compelled rational
individuals to start thinking logically that their over-reliance on dollar
could be a wrongful decision and they must have another option too at the mean
time.
Multiple scholars and
analysts are engaged in explaining the phenomenon of "de-dollarization"
which associated the string of dollars with elimination or
restriction because countries like
Russia and Iran are not interested in being involved in trading through the
exchange of dollars. The only resolution required is the cooperation and
teamwork that could bring a fresh wave of stability into global finance and
economics, turning this chaotic world into peaceful. Peacemakers must promote
‘cooperation over war’ which is a fundamental requirement for promoting every
currency alongside Dollars and Yuan, balancing the world’s ‘money devaluing’
deed, leading towards influential structural changes and for bringing ultimate
peace.
Pausing
firmly onto the money cooperation instead of competitive devaluation is crucial
for fostering sustainable growth and stability in all affairs of the world.
This coordination can help in minimizing the fraudulent money schemes, money
manipulation and inflationary matters around the globe. Trade frictions
elimination and alignment of monetary policies are the smoothest outcomes of
collaborative efforts. Efforts must include incorporating Asian currencies as
the climacteric part of coordinating plans through planned and constructed unit
which can manage the stability of currencies like Pakistani rupees, Indian
rupees, Dirham and Riyal. But to keep in consideration, is a suspected
challenge that misaligned coordination could lead towards more trade conflicts
with the need of sustaining the political and government consensus for being
immersed into the financial stability and getting rid of inflation, completely,
one day!
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