ABUJA, Nigeria (AP) — The loss of business at Kingsley Odafe’s clothing store in the Nigerian capital has forced the layoff of three employees.
One of the causes of his problem stands out. It’s US dollars. Strength against Nigerian currencyThe naira has pushed the prices of clothing and other foreign goods out of reach of domestic consumers. The price of a bag of imported clothing is three times what it was two years ago. The recent price is around 350,000 naira, or $450.
“Because it’s no longer sold, people have to eat first Before you buy clothes,” says Odafe.
Many developing countries are tired of the American way. Domination of the global financial system — especially dollar power. They are planning to broadcast their grievances as a TV program next week. BRICS area The countries of Brazil, Russia, India, China, South Africa and other emerging market countries will meet in Johannesburg, South Africa.
But complaining about Kingdarar is easier than actually banishing him. de facto world currency.
The dollar is by far the most used currency in global business and has overcome past challenges to maintain its prominence.
Despite repeated discussions about the BRICS countries adopting their own currencies, no concrete proposals have been made for the summit, which starts on Tuesday. However, emerging economies are discussing expanding trade in their own currencies. reduce dependence on money.
At the BRICS Foreign Ministers’ Meeting in June, South Africa’s Naledi Pandor said the BRICS New Development Bank would seek alternatives to “currencies currently traded internationally”, a euphemism for the dollar. . Pandor sat alongside Sergei Lavrov of Russia and Ma Zhaoxu of China. These two are representatives of two countries that particularly want to weaken. America’s International Financial Influence.
The BRICS grouping dates back to 2009. Originally just he was BRIC, a term coined by Goldman Sachs economist Jim O’Neill to refer to the emerging economies of Brazil, Russia, India and China. South Africa joined in 2010 and added an ‘S’ to its name. More than 20 countries have made statements, including Saudi Arabia, Iran and Venezuela. Interest in joining BRICS.
In 2015, the BRICS countries launched a new development bank to replace US and European-led policies. International Monetary Fund and world bank.
Ugandan political activist Martin Sempa, who has defended the law Uganda passed, said: “Developing countries will loosen their grip on Western dominance and move toward a new world order in which the East will have equal or greater influence. I’m itching to open the door,” he said.year of prescription Death penalty for some homosexual acts.
law The World Bank announced earlier this month that it would stop making new loans to East African countries.
Developing-world critics say the U.S. is using the dollar’s global influence to impose financial sanctions To the adversary, as it was to Russia after the war, Invasion of Ukraine last year.
They also complain that dollar fluctuations can destabilize the economy. For example, a rising dollar could cause turmoil abroad by calling in investments from other countries. It also increases the repayment cost of dollar-denominated loans. buy imported goodsprices are often expressed in dollars.
Kenyan President William Ruto complained earlier this year about Africa’s dependence on the dollar and currency. economic impact While the Kenyan Shilling plummets in value, it is freed from its ups and downs. He called on African leaders to join an emerging pan-African payment system that uses local currencies to facilitate trade.
“How is the US dollar involved in trade between Djibouti and Kenya? Why?” he applauded at the meeting.
Brazilian President Luis Inacio Lula da Silva supports a common currency for commerce in the Mercosur region of South America and South American countries. Trade between BRICS countries.
“Why does Brazil need dollars to trade with China and Argentina? We can trade in our own currency,” he told reporters earlier this month.
But if the dollar’s shortcomings are readily apparent, its alternatives are not.
“At the end of the day, if you want to keep foreign exchange reserves safe, you have to convert them into dollars,” said Daniel Bradlow, a senior fellow at the University of Pretoria and a lawyer specializing in international finance. “We need to borrow in dollars. We can all see that there are all sorts of problems with doing this, but if there was an alternative, people would use it.”
Researchers at the US Federal Reserve have calculated that as it stands, between 1999 and 2019, 96% of the Americas’ trade was billed in dollars, 74% of Asia’s trade, and euro-bearing Europe. excluding the rest of the world, 79% were billed in dollars.
Still, the dollar’s dominance over global commerce has weakened somewhat in recent years as banks, businesses and investors turned to the euro and the Chinese yuan.
But even 24 years after the introduction of the euro, the world’s second-largest currency still cannot match the dollar in terms of international gravity. The dollar is used in foreign exchange trading three times more than the euro, Harvard University economist Jeffrey Frankel said in his paper. study last month.
And the renminbi is restricted by the Chinese government’s refusal. Free currency trading in the world market.
“None of the alternatives to the dollar have been able to reach dominance levels,” said Michaela Papa, a senior fellow at Tufts University’s Fletcher School of International Affairs. “So now, the idea of having a new BRICS currency[to cause a big cataclysm]overnight takes time and requires trust…I see this road to be very long. ”
The dollar still has its supporters. In Argentina, Javier Milay, who was elected after Monday’s primary vote, most likely presidential candidate In October’s general election, the country is seeking a dollar to replace the troubled peso.
In Zimbabwe, the Lovemore Mutenha liquor store collapsed. Attack of hyperinflation It was only when countries abandoned their local currencies and switched to a basket of currencies dominated by the dollar that he was able to revive his business.
“The US dollar has given us life back. “How can I budget with ready-to-use Zimbabwean dollars?” change in valuesIt’s not stable and we’ve had burns before.? ”
In 2019, the government reintroduced Zimbabwe’s currency, banning the use of foreign currencies in domestic transactions.
However, the renewed Zimbabwean dollar plunges. The US dollar continued to trade on the black market, but the government lifted the ban. Currently, 80% of domestic transactions are conducted in USD.
Finance Minister Mutri Nkubu often pleads with the public to accept the local currency.
But even government officials are demanding payments in US dollars, and nearly all service providers claim they only accept US dollars.
Harare economic analyst Prosper Chimbala said the US dollar “always has a stabilizing effect.” But Zimbabwe’s economy, with its low industry, low investment, low exports and high debt, cannot raise enough dollars to meet its daily commercial needs.
This led to a niche business on the streets of the capital. Vendors repair worn or shredded $1 bills for a small fee.
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Imley reported from Cape Town, South Africa. Mutsusaka from Harare, Zimbabwe. And Wiseman from Washington. AP reporter Carla Anna from Nairobi, Kenya. Rodney Muhumza from Kampala, Uganda. and contributed by David Villar of Rio de Janeiro.