What are some risks that were not mentioned that we should be discussing as well? How do you believe the BRICS nations will respond to the dollar surge? Discuss why emerging markets are affected by a surging dollar and how their economies will cause volatility in the world economy.
What are some risks that were not mentioned that we should be discussing as well? How do you believe the BRICS nations will respond to the dollar surge? Discuss why emerging markets are affected by a surging dollar and how their economies will cause volatility in the world economy.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:What are some risks that were not mentioned that we should be discussing as
well?
How do you believe the BRICS nations will respond to the dollar surge?
Discuss why emerging markets are affected by a surging dollar and how their
economies will cause volatility in the world economy.
Transcribed Image Text:Dollar's Resurgence Is a Headache for the Rest of the World
Summary: The 10-year OTR (on-the-run) Treasury is approaching 5%, and oil is
getting close to $100, so why don't we just throw in a surging dollar to make things
interesting? Why not? Oil is going up; you have to buy oil on the dollar so it makes
sense that the dollar goes up as well. Higher interest rates, soaring energy prices,
and now many countries that are seeing their currency depreciate against the
dollar is a perfect recipe for a global recession. If all this was not enough, countries
around the world issued massive amounts of debt after Covid. As their currency
depreciates, it makes those countries' debt service increases because their
currency has less purchasing power. If these countries have less purchasing
power, it also makes it more expensive to import.
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