Kingsley Odafe’s clothing store in Nigeria’s capital has gone out of business, forcing him to lay off three employees.

A culprit for their troubles emerges: the strength of the US dollar against the Nigerian currency, the naira, has pushed the cost of clothing and other foreign goods beyond the reach of local consumers.

A bag of imported clothing costs three times more than it did two years ago. These days the price is running around 350,000 Naira, or US$450.

There are no sales anymore because people have to eat before they can think about buying clothes,” Odafe said.

In the developing world, many countries are fed up with the dominance of the US over the global financial system, especially the strength of the dollar.

They will air their grievances next week when the BRICS grouping of Brazil, Russia, India, China and South Africa meets with other emerging market countries in Johannesburg, South Africa.

But it’s actually easier to get hold of King Dollars than to hoard real world currency.

The dollar is by far the most used currency in global trade and has overcome previous challenges to its prominence.

Despite repeated talks of BRICS countries implementing their own currency, no concrete proposals have emerged for the summit starting on Tuesday. However, emerging economies have discussed increasing trade in their currencies to reduce their dependence on the dollar.

At a meeting of BRICS foreign ministers in June, South Africa’s Naledi Pandor said the bloc’s New Development Bank would seek alternatives to existing internationally traded currencies, a euphemism for the dollar. Pandor sat with two delegates, Sergei Lavrov of Russia and Ma Zhaoxu of China. Countries that are particularly eager to undermine America’s international financial clout.

The BRICS grouping was established in 2009. Originally, it was just BRIC, a term coined by Goldman Sachs economist Jim O’Neill to refer to the growing economies of Brazil, Russia, India and China. South Africa joined in 2010 by adding an S to the name. More than 20 countries, including Saudi Arabia, Iran and Venezuela, have expressed interest in joining BRICS.

In 2015, the BRICS countries launched the New Development Bank as an alternative to the US and European dominated International Monetary Fund and the World Bank.

Developing countries are keen to loosen the grip of Western dominance and open the door to a new world order where the influence of the East is equal to, if not greater, Martin Sempa, a Ugandan political activist. has defended legislation passed by Uganda this year. Death penalty for certain homosexual acts.

The law prompted the World Bank to announce this month that it was freezing new loans to the East African country.

Critics in the developing world are particularly uneasy about America’s willingness to use the dollar’s global influence to impose financial sanctions against opponents, as it did with Russia last year after its invasion of Ukraine.

They also complain that fluctuations in the dollar can destabilize their economy. For example, a rising dollar can create chaos overseas by drawing investment from other countries. It also increases the cost of servicing dollar-denominated debt and buying imported products, which are often priced in dollars.

Kenya’s President William Ruto has complained about Africa’s dependence on the dollar and the economic consequences from its volatility this year, while the Kenyan shilling has declined in value. He urged African leaders to join a new pan-African payment system that uses local currencies to encourage more trade.

How is the US dollar involved in trade between Djibouti and Kenya? Why? He asked for applause in a meeting.

Brazilian President Luiz Incio Lula de Silva has supported a common currency for commerce within the South American bloc Mercosur, and for trade between BRICS countries.

Why does Brazil need dollars to trade with China or Argentina? We can trade in our currency, he told reporters this month.

But if the dollar’s shortcomings are readily apparent, its alternatives are not.

At the end of the day, if you want your reserves to be safe, you have to keep it in dollars,” said Daniel Bradlow, a senior research fellow at the University of Pretoria and a lawyer specializing in international finance. You’ve got to borrow dollars. Everyone can see all the problems with doing this, but if there was an alternative, people would use it.

As it stands, according to the US Federal Reserve’s calculations, from 1999 to 2019, 96 percent of trade in the US was invoiced in dollars, 74 percent of trade in Asia, and 79 percent of trade outside Europe, which has the euro. . Reserve Researcher.

Nevertheless, the dollar’s grip on global commerce has loosened somewhat in recent years as banks, businesses and investors have turned to the euro and China’s yuan.

But 24 years after the euro was introduced, the world’s No. 2 currency still doesn’t rival the dollar for international seriousness: Harvard University economist Jeffrey Frankel said the dollar is used in three times more foreign exchange transactions than the euro. is done. study last month.

And Beijing’s refusal to let the currency trade freely on world markets limits the yuan.

“No alternative to the dollar has managed to reach dominance levels,” said Michaela Papa, senior fellow at Tufts University’s Fletcher School of Global Affairs. “So the idea is that now, overnight, you have a new BRICS currency that (reason ) Will do ) A big upheaval takes time, takes trust… I see this way too long.”

There are still supporters of the dollar. In Argentina, Javier Miley, who emerged from primary voting on Monday as the front-runner in October’s general election, is calling for a dollar to replace the country’s beleaguered peso.

In Zimbabwe, Lovemore Mutenha’s liquor store collapsed when hyperinflation struck in 2008. He managed to revive the business only when the country abandoned the local currency for a basket of currencies dominated by the dollar.

The US dollar has given us our lives back. We can do nothing without it, said Mutenha, 49, in the working-class suburb of Warren Park near the capital Harare. How can one budget with the Zimbabwean dollar whose value is always changing? It’s not constant, and we’ve been burned before.

In 2019, the government reintroduced the Zimbabwean currency and banned foreign currencies in local transactions.

But the revived Zimbabwean dollar faltered. US dollars continued to be traded on the black market and the government lifted the embargo. Now 80 percent of the transactions in the country are done in US dollars.

Finance Minister Mathuli Ncube often appeals to people to adopt the local currency.

But even government employees demand payment in US dollars, arguing that almost all service providers only accept dollars.

Prosper Chitambara, an economic analyst in Harare, said the US dollar has always had a stabilizing effect. But Zimbabwe’s economy, which has little industry, low investment, few exports and high debt, cannot attract enough dollars to meet the needs of everyday commerce.

This has given rise to a niche business on the streets of the capital: vendors repair worn or mutilated USD 1 notes for a small fee.


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