The strength of the U.S. dollar — at a 20-year high — is spelling trouble for indebted smaller nations that now must pay more on their loans. In Sri Lanka, a default made it nearly impossible for the country to buy food and fuel on international markets.
Large numbers of workers from different sectors protest against inflation and in favor of higher wages in Buenos Aires, Argentina, on Aug. 17, where inflation has soared.Pablo Barrera/Anadolu Agency via Getty Images
Last week, Argentina slapped sweeping new restrictions on imports of everything from whiskey to software to consulting services to try to contain inflation that's running at over 70%. The South American nation has been hemorrhaging foreign currency and the strengthening U.S. dollar threatens to make that worse. In July, the value of the Argentine peso fell to aFrancesc Balcells, who manages emerging market debt at the Dubai-based Frontier Investment Management Partners, says U.S.
Not only do poorer countries have larger debts in U.S. currency, now they are having to pay even more for imports bought in dollars as the currency strengthens. And this time around, global prices for fuel and food were already surging, due to currency fluctuations and significant supply shortfalls caused by the Russian invasion of Ukraine.One of three ports on the Danube River on the border between Ukraine and Romania in May.
"Right now, the world is experiencing the worst food security crisis any of us have ever seen," says U.S. Ambassador to the United Nations Linda Thomas-Greenfield. Speakingin late August, Thomas-Greenfield said much of the current global food crisis is driven by the Russian invasion of Ukraine.
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