The effects of the COVID-19 pandemic had a very disastrous impact on the US dollar, largely because of the endorsement given by the Central Bank of the United States of America when it authorized the issuance of more dollars, which flooded the international money market.
This uncontrolled issuance of the dollar caused an economic recession and the Federal Reserve (Fed), the American Central Bank, drastically reduced interest rates to 0%, making the United States less attractive to potential foreign investors and they sought out to other markets, to inject their capital and where they will have a much higher return on the money invested.
The American Central Bank admitted this impression of more dollars to combat the effects of COVID-19, but it opened a hole in the domestic and international economy, 2020 was the year that more dollars were printed in the history of this currency, helping to give oxygen to the markets and also mitigate the effects of tax expenditures. This action had consequences for the dollar (massive issuance of money) helping to bury the currency's value down in relation to the main competing currencies worldwide.
This reduction in the value of the dollar worldwide can be analyzed using the Bloomberg Dollar Index, this index analyzes the performance of the currency in comparison with several other planetary currencies, this index also includes emerging countries that have the highest liquidity in the foreign exchange markets and the largest transactions with the United States of America. The dollar had a big drop in the last few months and reached a 12% drop and will continue to fall.
Three big reasons that will continue to pull the dollar down
It is important to point out that a Dollar Crash is out of the question but its devaluation is going to or may be a reality in many parts of the world, not only in the domestic market but in many emerging and underdeveloped countries and there are reasons for this to happen:
There is currently a large deficit in the current account of the United States. In short, the United States of America pays more for the exchange of goods, services and transfers more than it receives, this deficiency in the balance will cause the dollar to be pulled further down.
The appreciation of the euro after two major European powers (Germany and France) reached consensus for a fiscal stimulus and bond issue package
The Federal Reserve can hardly prevent the dollar from falling
The Federal Reserve's policy created an excess of liquidity in the market, helping to mitigate the effects caused by the COVID-19 pandemic but with the country's growing dependence on foreign capital to save the deficiency of domestic savings that will certainly lead to devaluation. sharp rise in the dollar.
Effects of the dollar's devaluation on African markets, example Mozambique
Mozambique has always been a country dependent on the international currency, more specifically the dollar, everything that enters the country is quoted in this currency from direct consumption goods (staple food, essential raw material for industry, vehicles, fuel and much more) and with the devaluation of the imminent dollar the country is in a very bad position. Firstly, because the prices of basic necessities soar by more than 30%, while the dollar is losing ground in Mozambican fiduciary money, it still has no weight, making the life of the peaceful citizen more expensive. Just to have an overview of the matter while the dollar was traded for 75 MZN / dollar for example the price per kilo of rice in the square was about 85 cents of the dollar, but with the devaluation of the dollar in the market the same kilo passed to cost $ 1, as the value in the currency market has dropped but the price of life has not improved.
In other words, the dollar has lost value but the metical's weight has not been noted at all and continues to fall, reaching alarming levels, where the price of food consumption goods can reach 2 dollars per kilo, that would be a total disgrace, because to close this deficit it would be necessary for the currency to gain value in relation to the dollar, so the prices of consumer goods can also be beneficial to the consumer's pocket.
This is due to the inverse relationship between the price of commodities and the behavior of the American currency. Historically, when the dollar depreciates, the price of commodities goes up - and vice versa.
That's because most commodities are quoted in dollars, so consumers and businesses outside the U.S. see their purchasing power increase when their currencies get stronger. The greater global demand for these products ends up raising their price
The devaluation of the dollar is also reflected in the prices of services, today for example to import a second-hand vehicle from Japan, which previously cost $ 2000, now costs around $ 4000 plus shipping charges which sums up the loss of value of the US dollar is hardly helpful.
How to solve this
One of the things that could help a lot would be the appreciation of the metical against the dollar, that is, the MZN will have to be quite strong in order to have purchasing power and reduce the gross domestic deficit, it will have to have a positive export balance, export more and import less but for this a lot will have to change and more investors will have to be willing to invest more clear capital with promises of a higher interest return on the amount invested. This positive balance would reduce the metical's dependence on the dollar and give more breathing space to ordinary citizens.
Using Bitcoin Cash as an emerging solution to the crisis.
With all this you can say that the fiat money is broken and saving money in that form of value is practically nothing. I, for example, use Bitcoin Cash to close this deficit and, frankly, I no longer change directly in the conversion into the currency of the day, but instead I sell Bitcoin Cash for those who pay the most. It is a positive way to fight with the crisis caused by the collapse of the dollar and to value Bitcoin Cash more in my market, because if the metical was so strong I would not need to sell it but to exchange it using the direct conversion value MZN / by exchange dollar of the day, that, if there was a need to use the value in Fiat.
Bitcoin Cash has become the best source of electronic money for me, all my assets were already in Bitcoin Cash, I do not use a bank account and Bitcoin Cash works for me and it is not necessary to have a fiduciary account controlled by centralized entities and gives me financial freedom to do what I want when I want at any time of the day anywhere in the world and most importantly, paying absurdly low transaction fees and having my daily transactions confirmed quickly on the net.
Bitcoin Cash fixes this problem of devaluation of the dollar and, oddly enough, the currency is safer than the fiat currency as it gains value and does not suffer inflation, there is no danger of flooding the market with Bitcoin Cash because it has a total supply of 21 million coins. This property of Bitcoin Cash is very important as it ensures that the currency is not influenced by the value of the dollar but rather is quoted in it as a global currency but honestly the currency is priceless because its value reflects what the buyer wants to pay and the more popular it becomes more attractive it becomes for the market.
Conclusion
The devaluation of the dollar is just beginning and it will still be talking around the world, it is necessary for people to realize that other forms of safer money will emerge and Bitcoin Cash is one of those forms of payment. Just to remember, one of the reasons for the creation of Bitcoin Cash was because the world was experiencing an economic recession and Satoshi engendered the emergence of the currency that was intended to protect ordinary people and give them decision-making power over the matter and more once the world is plagued by a serious financial crisis, making the use of decentralized currencies so important for the survival of man on the planet.
The fiat money is broken and Bitcoin Cash is the best possible investment at this time, it is time to bet more on the currency and replace (at least for me) the entire fiat in BCH, so no one will have to suffer the effects of a devaluation of the US dollar.
V nice