Impact of Dollarization on International Supply Chains and Bulgarian Companies
Dean Todorov, the director for Bulgaria at iBanFirst, comments on the implications of dollarization on international supply chains and Bulgarian companies.
The market unanimously expects an increase in the US dollar in the event of Donald Trump returning to the White House, despite the Republican’s stated intention to devalue the dollar. The dollar index could rise by 10% over five years, further solidifying the overvaluation of the American currency compared to its major counterparts. This forecast was made by analysts at the international company.
BanFirst. Най-силно влияние имат икономическите резултати на страните и тяхната търговска активност. В момента доларът се изправя срещу други валути, като еврото и щатския долар, което може да доведе до промени във валутните курсове и влияние върху търговската баланс.
The Impact of a Strong Dollar on Bulgarian Trade Companies
A stronger US dollar can benefit Bulgarian trade companies by making exports cheaper for foreign buyers. At the same time, it can also pose a challenge by increasing the costs of importing goods and services valued in dollars, which can lead to a decrease in profit margins,” commented Dean Todorov, Bulgaria director at iBanFirst.
Under the Dictates of Markets
In the field of global politics, factors dependent on collective and global actions influence the economy, as pointed out by iBanFirst. Economic results of countries and their trade activities have the strongest influence. Currently, the dollar is pitted against other currencies, such as the euro, which can lead to changes in exchange rates and impact the trade balance.
Impactul intenției lui Trump asupra dolarului american
Potrivit lui Trump și lui VP candidate Vand, ei doresc să oblige dolarul american pentru a sprijini exporturile americane și a reduce importurile, consolidând astfel industria americană. Cu toate acestea, piața se așteaptă în mod unanim la o apreciere a dolarului american în cazul unui întoarcere a republicanului la Casa Albă. Această certitudine se bazează pe starea actuală a economiei și pe perspectivele viitoare.
Deși Trump a exprimat intenția de a devaloriza dolarul american, investitorii sunt precauți și nu sunt convinși de această strategie. Pe măsură ce alegerile se apropie, este crucial să monitorizăm evoluția dolarului american și să fim pregătiți pentru orice schimbare majoră în valoarea sa pe piață.
The Impact of Protectionism on Currency Value
Myths are at the core of Donald Trump’s economic thinking and his transactional approach to international relations. However, theory and facts show that they lead to currency appreciation, according to currency experts.
Two Elements Contributing to a Stronger Dollar
When it comes to imports and their impact, two elements can contribute to a stronger dollar this year and in 2025, analysts predict.
Protectionism combined with a strong currency
The Impact of Interest Rate Cuts on the US Dollar
Currently, the Federal Reserve of the United States is unlikely to cut interest rates, as they are soon to begin a cycle of rate hikes. This decision could have significant implications on the value of the US dollar.
Reduced Imports and Strengthened Dollar
One of the effects of a rate hike is a decrease in the volume of American imports, leading to lower demand for foreign currencies compared to the US dollar. This can result in the strengthening of the dollar as a result. Experts believe this mechanism could come into play as early as next year, as predicted by iBanFirst.
The Dollar as the Modern Holy Grail
Analysts suggest that the US dollar remains the global standard for currency, with its value and stability affecting economies worldwide. As the Federal Reserve considers its next move, the impact on the dollar’s value will be closely watched by financial markets around the globe.
The Role of the US Dollar as a Reserve Currency
The US dollar is a reserve currency that creates structural demand from investors, institutions, companies, and central banks. This privileged status is particularly supported by the military power of the United States. A study by the Fed from 2023 shows that three-quarters of dollar reserves are held by countries with strong military ties to the US.
The Dominance of the US Dollar in Global Trade
Goods are priced in US dollars. Global trade is invoiced in US dollars. Global supply chains are financed in US dollars.
The Dominance of the Dollar in International Markets
The world’s need for the dollar is undeniable, leading to the existence of vast offshore markets for debt securities denominated in US dollars, known as eurodollars, as explained by iBanFirst. Despite attempts to reduce the influence of the dollar, such efforts have largely been unsuccessful, as seen with the euro. When the euro was introduced, it aimed to compete with the dollar, but ultimately failed to do so. Instead of witnessing a de-dollarization of the world (except for Russia and to a lesser extent China), we have seen a de-euroization – a decrease in the share of the euro in international transactions.
Can Trump Depreciate the Dollar?
According to the latest data from Swift, the dollar remains the dominant currency, as confirmed by currency experts.
What Can Trump Do to Depreciate the Dollar?
However, let’s assume that Trump really wants to see a structural devaluation of the dollar. His only option would be to take action that truly threatens the reserve status of the greenback. This goes far beyond challenging the independence of the Fed and does not seem to be a problem for the Republican candidate.
The Impact of Political Decisions on Financial Markets
Political decisions can have a significant impact on financial markets, causing concern among investors. However, these decisions are not always enough to raise doubts about the stability of the currency. If creativity is needed for a political strategy to succeed, it could create serious problems for financial markets, especially in the absence of a clear monetary alternative and a monetary agreement like that of the 1980s. The good news is that this scenario is unlikely to happen.
The Impact of Trump’s Presidency on the Dollar
Trump has always been a figure associated with strong words and controversial actions. Many believe that his presidency would benefit the dollar, as seen by the majority of the market. According to our estimates, the dollar index could increase by 10% over five years, leading to an overvaluation of the American currency compared to its main counterparts.
If Kamala Harris were to win, the dollar is still expected to remain strong, albeit to a lesser extent than under Trump’s presidency. This is mainly due to the anticipated superiority of the American economy compared to others.
The Last Saint
Dean Todorov commented on the remaining saint, expressing his admiration for their selfless acts and dedication to helping others. He highlighted the importance of following their example in today’s society.
Investment Disclaimer
It is important to note that the content of this article should not be taken as a basis for making investment decisions. Always seek professional advice before making any financial choices.
