When it comes to assessing the Dollar rate of Southeast Asian countries, it seems to be increasing on a regular basis. From the time of independence till now the dollar rate has risen 15-20 times of its initial value. During the time of Bangladesh’s independence in 1972, $1 was equal to 7.7Taka and in the case of India in 1947 $1 was equal to approximately 4rupees. But when we look at the current dollar rate according to Bangladeshi currency $1 equals 120Taka and in the case of Indian currency, $1 equals 80rupees. So, what is the reason behind the rapid increase of the dollar rate? The countries in Southeast Asia have a floating exchange rate system where the exchange rates of these currencies are determined by market factors such as supply and demand. For example: if the demand for US dollars increases in the forex market, the value of the value of the dollar will be appreciated. When the demand for the dollar increases then so does its value. Conversely, if the demand decreases, so does the value. The demand for the dollar increases when international parties, such as foreign citizens, foreign central banks, or foreign financial institutions demand more dollars. Normally, the demand for the dollar is higher in those countries which import more than it exports. Most countries of Southeast Asia import more than those export. So, who benefits from a strong dollar rate? A strong dollar rate means U.S. consumers benefit from cheaper imports and less expensive foreign travel. The issue of imports-exports and supply-demand are correlated. If a country imports more it needs a good supply of US dollars as this is the only currency accepted all over the world. So, in the case of countries that are importing more, they need more dollars to import goods from other countries and they have a high demand for dollars. In the case of Southeast Asian countries, most of the countries depend on imports, and in the case of exports they are manufacturing hubs for cheap labor. At one end Southeast Asian countries are importing at a high dollar rate which means they are purchasing at high prices according to their currency, but exporting at a lower dollar rate. This proves how US consumers benefit from import-export. Due to continuous strengthening of US currency US imports are gradually being conducted at a lower rate. This is heavily affecting the countries of Southeast Asia as they are exporting the same consumer goods at a lower value than in previous years. So, due to continuous dollar rate increase inflation is the resultant outcome. As per the current rate of inflation across all currencies, the safest reserve is the US Federal Bank as the Federal Reserve rate was 0 in February 2022 and now it is 3.5%. Now let’s understand the gameplay which is American Banks need to maintain a fixed amount with US Federal Bank and for that purpose loan transfer from other banks on a daily basis with interest. That loan is called Federal Interest Loan. When the Federal increases that interest rate all investors of the world take out money from their current investment and invest in a US Federal Bank because investment in a Federal Bank is considered the safest investment in a difficult situation. One can only invest in Federal Bank in USD. Hence, it hikes its demand and consequently, the price of USD goes up. This chain has been going on for the last 2years.
