Jack Dorsey, the founder of Twitter and payment technology company, Square, has stated that the effects of the US dollar inflation is being negatively felt by Nigeria and other developing countries.
Dorsey disclosed this in a tweet while reacting to the effects of the US Fed dollar printing over the past years.
This comes as the Bloomberg Dollar Spot Index rose to its highest level since 2020.
What Dorsey is saying
In a response to the White House stating that it expects US inflation to be ‘extraordinarily elevated’ in a new report, Dorsey stated, “Every administration, republican or democrat, has an opportunity to build trust with the public. Instead, every single time, they choose deception and zero accountability. It’s not the party, it’s the system.”
On the negative consequences of US Fed printing, Dorsey responded “You don’t understand the power of the dollar and our single export. Ask someone in Nigeria how the dollar affects them”
How US inflation affects poorer countries
- In February, the American consumer price index jumped 7.9% from a year earlier following a 7.5% annual gain in January, accelerating in February to a fresh 40-year high due to rising fuel and food costs, which is also affected by the Russian invasion of Ukraine.
- However, the US inflation has also seen the US Dollar gain an advantage on its peers, as Bloomberg reported in its Bloomberg Dollar Spot Index that the dollar rose as much as 0.4%, eclipsing the previous high for 2022 and reaching a level unseen since July 2020.
- “The dollar advanced against most of its peers, with some of the biggest gains coming against the Australian and New Zealand currencies. At the same time, the British pound dipped below $1.30 for the first time since November 2020,” it said.
- The resulting effects hit poorer countries harder as they have to buy imports in US dollars, coupled with rising costs of raw materials and goods globally, especially diesel which is a necessity for doing business in Nigeria.
Nigeria’s inflation rate changed direction in February as it rose 15.7% from 15.6% recorded in the previous month. Ayobami Omole, an Equity and Thematic Research Analyst at Tellimer Research told Nairametrics that the high cost of diesel, partly caused by the Russian invasion of Ukraine, and impacting negatively on the manufacturing sector in Nigeria is set to push Nigeria’s inflation for Q2 around the 16% rate.