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| The dollar will rule in the new year as well |
Digital currencies could be challenging for the dollar * Initiatives to use alternative currencies to the dollar in international transactions have not been successful
To combat the global recession, major economic countries are conducting various activities to use alternative currencies to the dollar in international transactions. But the countries have not been very successful in this. However, the dollar's share in international transactions is declining.
Almost all countries in the world hold large reserves in US dollars. Now it is less than before. In this situation, the US central bank is increasing the interest rate to restore the value of the dollar. Further increases are predicted in the future.
In this, the dollar has managed to recover some of its previous position. No currency was created to replace the dollar. As a result, the dollar will rule international transactions in the new year. Such information has been obtained from the research report of Bangladesh Bank and International Monetary Fund (IMF).
According to the IMF report, in September 2021, the total reserves of all countries in the world were 1.292 billion dollars. Last September it decreased to 1.16 million dollars. In one year, the reserve has decreased by 1 lakh 32 thousand billion dollars. Almost all countries have increased import costs due to increase in the price of goods in the international market. Economic downturn has reduced export earnings and remittances. At the same time investment has decreased. Due to these reasons the reserve has decreased.
According to the Central Bank report, 98 percent of Bangladesh's foreign trade is done in dollars. In the last one year, the price of the dollar has increased by about 21 rupees. As commercial banks have increased in some cases even more. A rise in the value of the dollar has pushed up import costs, putting pressure on reserves. Which messed up the whole economy. Initiatives to open LCs in alternative currencies to reduce pressure on the dollar have not been successful.
Despite the central bank circular for opening LCs in Chinese currency RMB, entrepreneurs are not interested in it. Because commercial banks do not have enough RMB to import goods. Also exporters are not doing LC in RMB. Because the RMB earned through exports cannot be used anywhere else except China. But in business they have to communicate with different countries. They cost dollars. For this, importers and exporters are interested in doing foreign trade in dollars.
Meanwhile, India is also interested in foreign trade with Bangladesh in rupees. But same problem here. Banks do not have enough Rs. Exports to India are also low. Due to which the opening of LC in Rs. The central bank is unable to move ahead with a study on the opening of currency transactions with the Russian currency, the ruble.
Asian Clearing Union (ACU) transactions are settled in ACU dollars. It has no printed currency. There is only paper currency. With which the final transaction is done in dollars after dealing with the member countries. The IMF is trading its own currency in Special Drawing Rights (SDRs). It has no printed currency. All on paper. The final transaction is in dollars. Efforts are being made to trade in such currencies within the ASEAN countries as well.
Meanwhile, there is no shortage of attempts to create an alternative currency to the dollar due to geopolitical reasons. Digital currencies have come to reduce the impact of the dollar. Bitcoin has already gained a lot of popularity. But its acceptance is low as there is no regulator. There is no remedy if cheated. Still, a fraction of global trade is transacted in Bitcoin. China has already released a limited version of a digital currency to the market to reduce the impact of Bitcoin.
From last December 1, the central bank of India, Reserve Bank of India has released digital currency in the market in limited form. Bangladesh Bank has also already started a study on the launch of a digital currency. If these digital currencies are launched, it will be possible to trade in the international arena like Bitcoin.
According to sources, every country keeps foreign exchange reserves to deal with crisis. Most of the reserves are in dollars. Bangladesh's foreign exchange reserves rose to a maximum of $48.06 billion in August last year. Since then it has been decreasing. Last Thursday, the reserve was 32.57 billion dollars. The lion's share of reserves are held in dollars.
The IMF report also provides information on the amount of reserves in a country's currency. In September last year, the reserves of different countries in US dollars were seven hundred thousand and ten thousand billion dollars. Last September it fell to 644 billion dollars. At the same time, the global reserves in the euro, the single currency of the countries of the European region, decreased from two hundred and forty six thousand billion dollars to two hundred and twelve thousand billion dollars. Global reserves in Chinese currency RMB decreased from 32 thousand 126 billion dollars to 29 thousand 779 billion dollars.
Global reserves in Japanese currency yen decreased from 67 thousand 968 billion dollars to 56 thousand 643 billion dollars. Global reserves in the British pound fell from $55.86 billion to $49.733 billion. Australia's currency Australian dollar global reserves in September last year was 21 thousand 424 billion dollars. Last September it decreased to 20 thousand 626 million dollars. At the same time, global reserves in Canadian dollars fell from $26,427 million to $26,415 million.
While global reserves in those currencies fell, reserves in Switzerland's currency, the Swiss franc, rose. Reserves in this currency in September last year were 2 thousand 377 million dollars. Last September it increased to 2 thousand 504 million dollars.
Global reserves in other currencies have also declined over the same period. Global reserves in other currencies stood at $35,936 million in September last year. Last September it decreased to 35 thousand 647 million dollars.
As of last September, 59.79 percent of global total reserves were in dollars, 19.66 percent in euros, 2.26 percent in RMB, 4.62 percent in pounds, 5.26 percent in yen, 1.91 percent in Australian dollars, 2.45 percent in Canadian dollars, 0.23 percent in FRA and 3.31 percent in other currencies.
It is known that the US central bank overprinted about 300 million dollars in the market during Corona. The dollar printed at that time was behind the rise in inflation in the United States and other countries. To control inflation they are now raising interest rates to take some of the printed dollars out of the market. This has reduced the supply of dollars in the market. As a result, prices are increasing.
Besides, there is a negative impact of the global recession. Apart from this, in order to maintain the position of the dollar in the international arena, the US central bank has increased the policy rate to 4.5 percent in four rounds in the last six months. This is the highest interest rate in the last 15 years. A year ago, the interest rate was less than one and a half percent. A further increase to 5 percent has already been hinted at.
Interest rates have also increased as the dollar diversifies as policy interest rates rise. In November last year, the interest rate on one-month dollar savings bonds was 0.20 percent. It was in the same trend till last February. This rate has been increasing since March. Now it has increased to 4 percent. At the same time, the yen was at zero to 10 percent. It is still unchanged. The euro rate was negative. It has started increasing since last October. Now it has increased to one and a half percent.
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