Strong US Dollar Policy Triggers Currency Depreciation in Many Countries


Strong US dollar policy” is the main cause of the currency plunge in many countries, especially developing countries, according to analysts. This policy caused the US dollar to rise, thereby attracting capital back from countries with advanced economies (emerging markets). That puts developing countries and the world economy at risk.

Several countries in Asia were affected, such as Japan, South Korea and Indonesia, analysts said. Japan’s central bank on Friday kept interest rates unchanged. The Bank of Japan (BOJ) decided to set short-term interest rates at around zero to 0.1 percent, a month, after it ended its negative interest rate policy in its first rate hike in 17 years.

According to media reports on Monday, the Yen exchange rate against the US dollar fell sharply, reaching its lowest level in 34 years. Since currency is a medium of exchange, its stability plays an important role in business, trade and livelihoods.

South Korea, whose food and energy sectors are highly dependent on imports, is experiencing high inflation due to the depreciation of the Won, South Korea’s currency.

For countries such as Indonesia and Vietnam that frequently experience deficits, as well as high levels of inflation and external debt, a fall in their currencies makes it difficult to pay debts and interest, putting their economic stability at greater risk.