Amid the surge of the US dollar, financial literacy guru, Kalu Aja has argued that the US dollar should technically have the same value as the Zimbabwe dollar because they are both overprinted.
This was disclosed via his Twitter post amid the surge in the dollar seen yesterday as the US dollar index (DXY) hit a fresh 19-year high at 106.50. At the time of writing this article, the DXY had faced some pull-back to trade at 106.28. The current price is indicative of a 1.30% increase within the past 5 days, and 10.69% YTD.
Printed money can refer to physical cash, but it is also used to refer to money created by the Federal Reserve via a computer that adds to the overall money supply.
Based on data Nairametrics obtained, at the start of 2020, there was $4.155 trillion in circulation. However, the current balance sheet trend shows $8.928 trillion, a whopping 114% increase.
What the expert is saying
Kalu Aja said, “The US Dollar technically should have the same value as the Zimbabwe Dollar because both have been overprinted.”
“Yet the US index (DXY) is up, why? Investors are seeking the safety of the US Dollar.” He said. “Yes, that same inflated dollar.”
Kalu attributed the surge in the dollar to the confidence that investors and governments have placed on the greenback as a major component of their reserves.
He said, “Being a reserve currency is King”
What you should know
- US dollar’s share of global foreign exchange reserves fell in Q4 2021.
- The International Monetary Fund disclosed that the US dollar share of final foreign exchange reserves dropped in the fourth quarter of last year.
- This was disclosed by the International Monetary Fund in a blog post titled, “Dollar Dominance and the Rise of Nontraditional Reserve Currencies”.
- “The dollar’s share of global foreign-exchange reserves fell below 59 per cent in the final quarter of last year, extending a two-decade decline, according to the IMF’s Currency Composition of Official Foreign Exchange Reserves data.”
- The Bank of Israel recently presented a new strategy for its more than $200 billion in reserves, demonstrating the broader shift in the composition of foreign exchange reserves, according to the IMF.
- It will cut the share of US dollars in the portfolio starting this year and enhance allocations to the Australian dollar, Canadian dollar, Chinese yuan, and Japanese yen.
- The IMF also noted that the decline in the US dollar’s reserve hasn’t been matched by rises in the euro, yen, and pound’s share of the global reserve currency market.
