The Dollar's Global Dominance and Its Impact The US dollar dominates global trade, with 88% of foreign transactions conducted in dollars. Policies like Trump's "Make America Great Again" have strengthened the dollar by attracting investments to the US while weakening other currencies. This dominance impacts low-income countries through inflation and economic dependency on a strong dollar.
Exchange Rate Misconceptions Explained A country's currency value does not directly reflect its strength; for example, Bahrain has an expensive dinar but is economically smaller than many nations. Exchange rates are determined by fixed systems (like UAE), floating markets (Japan), or managed combinations (India). India uses a managed system where RBI intervenes to stabilize rupee fluctuations against the rising demand for dollars.
Rising Dollar Costs Burden Indian Economy As oil imports require payment in dollars, India's reliance on imported fuel leads to higher costs when the rupee weakens against the dollar. This increases prices across sectors—transportation fares rise, goods become costlier due to inflated logistics expenses—and businesses face heavier loan repayments tied to external debts denominated in USD.
'1 Dollar = 1 Rupee' Is Not The Solution 'Re-denomination,' as done by Turkey reducing zeros from their lira notes won't solve underlying issues like purchasing power parity disparities between nations such as India & USA . While exchange rate manipulation may appear appealing superficially , real problems lie within productivity gaps causing weaker comparative incomes locally despite cheaper living standards overall globally speaking
'Boosting Demand For Rupees Through Strategic Actions' To strengthen INR sustainably requires increasing domestic production competitiveness via Make-In-India initiatives alongside fostering public-private partnerships promoting unique exports e.g Alphonso mango branding internationally better tourism infrastructure development inviting NRIs back home generating forex inflows organically