The US Dollar has been the world’s reserve currency for decades, serving as the backbone of the global financial system. However, in recent months, an increasing shortage of one of the most basic yet essential components of modern economies: the US Dollar, has been experienced in the global economy. As countries scramble to secure the currency to conduct their businesses, experts warn that the Dollar shortage could have far-reaching consequences for the global economy. In this article, we explore the causes, implications and various ways to address shortage and what it means for businesses, investors and ordinary citizens around the world.
A Dollar crisis occurs when there is a shortage of the US Dollar in a country, leading to a rapid devaluation of the local currency, difficulties in accessing foreign currency, increased cost of imports and reduced foreign investment. This shortage has led to a rise in the value of the USD relative to the Kenyan shilling, making it more expensive for Kenyan to import goods and services.
The shortage of the US Dollar is also affecting Kenya’s ability to compete in the global market, as firms are forced to buy at higher rates, reducing their ability to negotiate favourable prices. Kenyan firms have cited the Dollar shortage among a string of domestic challenges that have obstructed their expansion capacity and impacted revenue.
The shortage in Kenya has severely impacted commercial transactions, leading to the proliferation of forex bureaus and a black market due to commercial banks raising the rates thus widening the spread between the official and open market rates.
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