As the U.S. accelerates its interest rate hikes at a rapid pace and the dollar strengthens, currencies in emerging countries are depreciating.
The depreciation of domestic currencies leads to accelerated inflation and swelling of national debts, raising vigilance as a new risk to the global economy.
The Federal Reserve Board, the central bank of the United States, has decided to raise interest rates by 0.75% on the 27th.
We have raised interest rates four times in a row since March this year, strengthening monetary tightening.
As a result, in the foreign exchange market, there is a growing tendency for the dollar to appreciate as interest rates are higher and more yields can be expected.
On the other hand, currencies in emerging countries are depreciating against the dollar.
Of these, in India, the currency rupee exchange rate fell to the 80 rupee level to the dollar in the middle of this month, reaching a record low against the dollar.
In addition, currency depreciation continues in the Philippines and Thailand in Southeast Asia, and Chile in South America.
While currency depreciation is expected to have the benefit of increasing exports, it also pushes up import prices and increases inflationary pressure.
In addition, there is a risk that the burden of repayment will increase as dollar-denominated debt swells, hurting the economies of emerging countries.
In South Asia, Sri Lanka fell into an economic crisis due to the accumulation of debts and the expansion of its debts, as well as the shortage of foreign currency and depreciation of the currency.
At the G20 = 20 major finance ministers and central bank governors meeting held this month, it was pointed out that the trend of emerging economies will be a risk in the future, and vigilance is increasing.
The situation of currency depreciation in each country is also hitting record lows
Currency depreciation has progressed rapidly in emerging countries, and some currencies have hit record lows against the dollar.
Of these, the Indian rupee has fallen about 7% against the dollar as of the middle of this month compared to the beginning of the year, hitting a record low of 1 dollar = 80 rupees.
In the middle of this month, the Thai baht fell by about 11% compared to the beginning of this year, the lowest price in about 15 years.
In addition, the Philippine peso also fell by about 10% compared to the beginning of this month as of the middle of this month, depreciating the currency to the level for the first time in about 17 years.
In Chile, South America, the peso is said to have fallen by about 24% from the beginning of this month to a record low in the middle of this month, and in Sri Lanka, which is in a serious economic crisis, the Sri Lankan rupee The price dropped sharply, and in May this year it fell about 87% compared to the beginning of the year.
Thai currency depreciation accelerates inflation Affects citizens' lives
In some emerging countries where currencies are depreciating, the prices of imported goods are rising, accelerating inflation and making life difficult for citizens.
The Thai restaurant, which has 11 restaurants in Thailand's capital Bangkok, has been offering fried pork, moo toot, and fried rice at a price starting from 25 baht (about 90 yen in Japanese yen) per plate. rice field.
However, last month, we raised the price of all dishes by 2 baht (approximately 7 yen).
This is the first time since the company was founded in 2004 that it will raise prices across the board.
In the background, in addition to soaring raw material prices, the depreciation of the Thai currency, the baht, is pushing up the prices of imported goods.
In Thailand, food is brought home directly in plastic bags, but the purchase price of plastic products has risen by about 10% since April.
The price of gas for cooking has risen by about 10% since May, and the price of pork has also risen by about 5% since May due to higher feed prices.
Thailand's overall consumer price inflation rate also rose to 7.6% last month, the highest level in about 14 years.
Mr. Nuwannath, the manager of the cafeteria, said, "I think the baht will continue to fall for the time being. A price increase is inevitable, and I thought it would be best for customers to keep it to a minimum."
On the other hand, a female customer said, ``Most of the imported goods have been raised in price.
In addition, a male customer said, ``I have no choice but to save what I can save and avoid using things that are not essential.''
Brazil's corporate hardship due to "rate hike to prevent currency depreciation"
On the other hand, Brazil has been ahead of the United States in raising interest rates 11 times in a row since March last year in order to prevent currency depreciation.
The policy rate has now risen to 13.25%.
By raising interest rates, the depreciation of the currency real can be suppressed to some extent.
However, the rapid rise in interest rates is burdening businesses and consumers.
A start-up company based in Sao Paulo, Brazil's largest city, that brokers accommodation, introduces vacant rooms in rental apartments to business people and tourists.
However, consumption is sluggish due to interest rate hikes.
The demand for people who want to rent a room is decreasing.
We have had to reduce the accommodation fee by about 10%.
The startup says it is being forced to rethink its future management plan.
``What has been caused by rising interest rates is a slowdown in economic activity. Borrowing has become more difficult, and companies are starting to invest less in new technologies and factories,'' said Thomas Gus.
Expert ``The economic slowdown in emerging countries is a risk to the entire global economy''
Tomosaki Masukawa, an economist at the Daiwa Institute of Research, who is familiar with the economies of emerging countries, said, ``For emerging countries, the timing has finally come to pick up their economies. There is a risk," he said, adding, "The trade deficit is expanding due to an increase in the value of resource imports, and the financial and debt situation is deteriorating. I have the impression that it's getting higher," he said.
On top of that, she said, ``Emerging countries have the power to drive the growth of the global economy, so if their economies slow down, or if social unrest or political unrest occurs and it spreads, it will affect the world. It poses a risk to the economy as a whole," he said.