Middle East

Will a sharp rise in the dollar affect other currencies?

Since early 2022, the dollar has surged to a 20-year high as the US Federal Reserve continues to tighten monetary policy and continue to raise interest rates. When the exchange rates of many of the world’s major currencies such as the Euro, British Pound, Chinese Yuan and Japanese Yen fell against green currencies.

The question here is about the impact of the depreciation of developed country currencies on product prices and how much Kuwait as an import market has benefited from that depreciation and whether there is any impact on prices. Local, local Arabic daily reports on European and Asian products.

First, it should be pointed out that currency depreciation is not an absolute evil for any country. Because, as confirmed by China when it resorted to currency depreciation, it is often beneficial in terms of the competitiveness of the goods it produces. A cheaper currency price means cheaper exports, so the renminbi makes the country’s products more competitive and increases demand in foreign markets.

For import markets of products in countries where the exchange rate has depreciated, this will likely reduce import costs, reflected in lower final prices at which those products are sold to consumers. Is this what happened in Kuwait?

Al-Rai surveyed the opinions of a number of Kuwaiti car dealers as examples to determine the extent to which consumer markets have been affected locally by the depreciation of the currencies of many exporting countries. .

In this regard, Khaled Al-Khaled, Chairman of the Board of Al-Khalid Auto Company, said the automotive sector in the Kuwaiti market was affected by changes in the foreign exchange rate against the dollar and the continuously rising Kuwaiti market. He said he was greatly affected. Interest rates in recent months in hopes that the sector will witness lower prices.

Al-Khaled explained that car price declines vary by source, suggesting they range from 5% to about 20%, including spare parts and new car prices.

Muhammad Doula, general manager of Al Zayani Motors, said that the depreciation of the euro’s exchange rate against the dollar could have a negative impact on “Ferrari” and “because companies generally pay in dollars for the cars they import for consumption in the local market.” Therefore, it indicates that it is the rise or fall of the US dollar that affects corporate prices.

Louay Mustafa, director of sales and marketing at Acura Al Mulla, explained that Japanese car prices have stabilized recently, and the Japanese yen has maintained its value against the US dollar, which is a sign of stability for Japanese companies. pointed out that it helps those prices.

Foreign trade statistics showed that Kuwait imported 9.61 billion dinars worth of goods from 15 countries in 2021. China has 1.72 billion, the US has 768.7 million, Japan has 554 million, Germany has 424.1 million, the UK has 228.72 million and Turkey has 228.7 million. 227.75 million dinars, France 217.42 million dinars and Switzerland 215.28 million dinars.

Of Kuwait’s non-oil exports, the UAE had the largest share, importing about 243 million dinars, followed by Saudi Arabia with 219.65 million dinars, followed by China with 215 million dinars.

Kuwait exported about 211.7 million dinars to India and 152.3 million dinars to Iraq last year, while Pakistan exported 94.16 million dinars.

According to statistics, Kuwait exports 84.33 million dinars to Qatar, 44 million dinars to Oman, 39 million dinars to Jordan, 25.5 million dinars to Singapore, 23.52 million dinars to Egypt, 21.1 million dinars to Portugal, and 1,995 dinars to Portugal. reached 10,000 dinars. 17.3 million dinars in Turkey, 1 million dinars in Bahrain, about 17 million dinars in Malaysia.

Kuwait enjoys a high exchange rate for the dinar (the world’s most expensive currency), and depreciation in the exchange rates of currencies such as the euro, pound sterling, yen and yuan is reflected positively in terms of currency reductions. . The cost of imported products from a country whose currency is declining, the rising dollar will lead to increased earnings for the country’s most important exports, except for oil, as Kuwaiti barrels are sold in US currency. means.

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https://timeskuwait.com/news/will-the-sharp-rise-in-dollar-affect-other-currencies/ Will a sharp rise in the dollar affect other currencies?

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