The surging dollar is making it difficult for food importers rom Africa to Asia to pay their bills as the import prices increase with the rise in the greenback. Importers in Ghana are also warning about the shortage in the run-up to Christmas, according to a Bloomberg report.
The report said thousands of containers loaded with food recently piled up at ports in Pakistan, while private bakers in Egypt raised bread prices after some flour mills ran out of wheat because it was stranded at customs.
A combination of high interest rates, rising dollar and elevated commodities prices are impacting the countries that rely on food imports. “They cannot afford it, they cannot pay for these commodities… It’s happening in many parts of the world,” the report said quoting Alex Sanfeliu, world trading head for crop giant Cargill Inc.
Ghanaian cedi has lost about 44 per cent this year against the dollar, making it the second-worst-performing currency in the world.
The rupee has also fallen by about 8-9 per cent in the current calendar year so far. Finance Minister Nirmala Sitharaman has said the rupee has not weakened but it is the dollar that has strengthened. Speaking to reporters after attending the annual meetings of the International Monetary Fund (IMF) and the World Bank, she asserted that the fundamentals of the Indian economy were strong and that inflation was low compared to other parts of the world.
“First of all I would look at it as not rupee sliding, I would look at it as dollar strengthening, dollar strengthening incessantly,” she said in reply to a question on weakening rupee. All other currencies around the world are performing against a strengthening dollar, she said.
“And I’m not talking technicalities, but it is a matter of fact that India’s rupee probably has withstood this dollar rate going up, the exchange rate in favour of dollar strengthening is there and I think Indian rupee has performed much better than many other emerging market currencies.” The rupee settled at 82.35 against the US dollar on Friday, having touched another record low of 82.68 on Monday after which the Reserve Bank of India (RBI) is likely to have intervened.
Some analysts say the central bank may have spent nearly USD 100 billion in the past year to defend the rupee. India’s forex reserves stood at USD 532.87 billion in the week through October 7, a far cry from USD 642.45 billion seen a year back. The RBI as well as Sitharaman have in the past attributed the decline in the forex reserves to valuation changes arising from appreciating US dollar.
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