The shortage of dollars in the world is increasing. The strict monetary policy implemented by the US Federal Reserve System (FED) has sharply reduced the volume of the world’s number one currency in circulation. Last week, “Bloomberg” reported that the shortage of dollars in a number of poor and developing countries has led to very serious problems.
Fed head Jerome Powell’s statement that the strict monetary policy will be continued indicates that the discount rate will be increased more sharply, not by 0.25 percentage points, as expected. Turbulence has already started to appear in the financial and stock markets. So, Silicon Valley Bank, one of the largest banks in the USA, unexpectedly went bankrupt. This has caused great alarm all over the world. According to The New York Times, other American banks may also face problems. Thus, the bankruptcy of “Silicon Valley Bank” can be considered as the beginning of a new crisis in the financial system, and investors can start withdrawing their money from other banks. The publication emphasized that the bankruptcy of the bank occurred two days after the credit organization took urgent measures to consider requests for withdrawing funds. At the same time, the sharp decline in the value of the bank’s investment assets shocked Wall Street and investors, causing a sharp fall in shares.
The panic in the US financial and banking system caused US Treasury Secretary Janet Yellen to make a special statement. He publicly assured investors of the stability of the American banking system. But whether investors believe in this promise is under serious question.
The closure of the US bank caused serious resonance in the European Union and Great Britain. Both Brussels and London have announced that necessary steps will be taken to protect their banking systems. This shows that the situation is quite serious.
These revolutions in the homeland of the dollar can lead to serious problems in the world financial system as a whole. The danger that this process will eventually lead to a crisis at the global level is quite real.
It is clear that the emergence of the global financial crisis will not bypass Azerbaijan, which is a part of the world economy. The appreciation of the dollar, the decrease in its volume in circulation, primarily lowers prices in raw materials markets. Already after Jerome Powell’s statement, the oil market has seen a drop in prices. In the last two days of last week, the price of Azerbaijani oil fell by more than 3 dollars. This means a decrease in the amount of foreign currency coming to the country.
It should also be noted that since the end of February, an increase in the demand for dollars has been observed in the auctions held by the Central Bank of Azerbaijan. The Central Bank sold $42.7 million on February 28, $51.7 million on March 2, $44.8 million on March 7, and $17.6 million on March 9. The appreciation of the dollar and the events in the US banking system may increase the demand for dollars in Azerbaijan.
At the moment, the world’s attention is on the United States. If there is an increase in excitement in the country’s banking system on the first working day of the week, the probability that it will be followed by a serious crisis will increase. This does not bode well for commodity markets or the economies of individual countries. (Musavat.com)
#awaits #pockets #week