Flame retardant fabric_Flame retardant fabric_Cotton flame retardant fabric_Flame retardant fabric information platform Flame-retardant Fabric News Foreign exchange reserves of many countries are exhausted! Or you may not be able to pay for the goods! Beware of risks of abandoned goods and foreign exchange settlement

Foreign exchange reserves of many countries are exhausted! Or you may not be able to pay for the goods! Beware of risks of abandoned goods and foreign exchange settlement

Currently, many countries are suffering from foreign exchange shortages and have to use every means to delay payment for imported goods and even restrict the import of non-essentia…

Currently, many countries are suffering from foreign exchange shortages and have to use every means to delay payment for imported goods and even restrict the import of non-essential goods.

Pakistan: On the verge of bankruptcy

“Batie” can no longer hold on. Pakistan’s economy is at risk of collapse, with rolling blackouts and severe foreign currency shortages making it difficult for businesses to operate. In 2023, Pakistan’s exchange rate has become more volatile, with a cumulative depreciation of 22% since the beginning of the year, further increasing the government’s debt burden.

As of March 3, 2023, Pakistan’s official foreign exchange reserves were only US$4.301 billion. Although the Pakistani government has introduced many foreign currency control policies and import restriction policies, coupled with China’s recent bilateral assistance, Pakistan’s foreign exchange reserves can still barely cover 1 Monthly import quota. By the end of this year, Pakistan will have to repay as much as $12.8 billion in debt. Pakistan has a heavy debt burden and high refinancing needs. At the same time, its foreign exchange reserves have dropped to extremely low levels, and its external solvency strength is very weak. Containers filled with imported goods are piling up at Pakistani ports, and buyers are unable to get the U.S. dollars to pay for the goods, the central bank said. Industry groups for airlines and foreign companies have warned that capital controls imposed to protect dwindling foreign exchange reserves are hampering their ability to repatriate dollars. Officials said factories such as textile and manufacturing are closing or reducing hours to conserve energy and resources.

Türkiye: Chill after the earthquake

The recent catastrophic earthquake in Turkey caused the already high inflation rate to continue to soar. The latest inflation rate is still as high as 58%. In February, the unprecedented honeycomb swarm of earthquakes reduced southeastern Turkey to almost rubble, killing more than 45,000 people, injuring 110,000 people, damaging 173,000 buildings, displacing more than 1.25 million people, and directly affecting nearly 13.5 million people.

JPMorgan Chase estimates that the earthquake caused direct economic losses of at least 25 billion U.S. dollars, and the future post-disaster reconstruction costs will be as high as 45 billion U.S. dollars, which will account for at least 5.5% of Turkey’s GDP in the next 3 to 5 years. All of them may become heavy shackles that restrict the healthy operation of local economy.

Source: Reuters

Affected by the disaster, Turkey’s current domestic consumption index has plummeted, the government’s financial pressure has increased sharply, the manufacturing and export capabilities have been severely damaged, and the economic imbalance and twin deficit dilemma have become increasingly prominent. The lira exchange rate suffered a severe setback, once falling to a historical low of 18.85 lira per US dollar. In order to stabilize the exchange rate, Turkey’s central bank has used 7 billion US dollars in foreign exchange reserves within two weeks after the earthquake, but it has still not been able to completely curb the downward trend. Bankers expect authorities to take further steps to reduce foreign currency demand.

Egypt: Currency Diving

Due to the lack of foreign exchange required for imports, the Egyptian Central Bank has begun to implement a series of reform measures including currency devaluation since March last year. The Egyptian pound has lost 50% of its value over the past year. In January this year, goods worth $9.5 billion were stranded in Egyptian ports due to a foreign exchange crunch, forcing Egypt to seek help from the International Monetary Fund for the fourth time in six years.

Egypt is currently facing its worst inflation in five years. In March, the inflation rate in Egypt exceeded 30%, and the people were miserable. In response, the Egyptian government recommended that people eat chicken feet to supplement their nutrition. However, chicken feet are usually discarded after the chickens are slaughtered locally. It’s just for cats and dogs to eat, so people are very angry. “In the past few months, the prices of basic daily necessities such as tomatoes, rice, and eggs have doubled. Many families cannot afford daily living expenses, let alone their children’s education expenses,” said a local.

At the same time, Egyptian people are increasingly relying on deferred payment services, and even choose to defer payment for relatively cheap daily necessities such as food and clothing.

Argentina: Inflation exceeds 100

Argentina is the third largest economy in Latin America and currently has one of the highest inflation rates in the world. On March 14, local time, according to data released by Argentina’s National Institute of Statistics and Census, the country’s annual inflation rate in February exceeded 100%. This is the first time Argentina’s inflation rate has exceeded 100% since the hyperinflation event in 1991. “There is nothing left. There is no money. People have nothing. What can they buy with them?” said a local citizen.

The rare drought in history will further worsen Afghanistan’s agricultural export expectations, which will have a significant impact on Afghanistan’s economy, taxation and foreign exchange reserves. It is expected that the export volume of Afghanistan’s three major crops (soybeans, corn and wheat) in 2023 will increase from 51.6 billion US dollars in 2022. Drops to $36.6 billion, high inflation and farm problems��The two major factors of substantial production cuts will become important triggers for the “hard landing” of the Afghan economy.

Nigeria: Currency exchange failed

Nigeria, Africa’s largest economic power, had a tough time last year, with its local currency, the naira, depreciating by more than 30%, hitting a record low. Last year, Nigeria’s inflation rate hit the highest level in the past 17 years, especially the annual increase in food prices, which was as high as 150%. In order to combat inflation, they came up with a big trick in October last year: the Central Bank of Nigeria announced plans to redesign its largest The new banknotes were officially issued in December of that year. The Central Bank of Nigeria set the deadline for the exchange of old and new currencies as February 10, 2023, hoping to absorb excess cash and control inflation.

However, they soon discovered that this was not feasible because only 45% of adults in Nigeria have a bank account and up to 80% of the rural population relies on cash transactions. So on March 3, local time, the Supreme Court of Nigeria declared that the policy of the Central Bank of Nigeria to replace the old banknotes with new designed naira banknotes was invalid.

Nigeria currently has multiple exchange rate problems. Import and export companies have no choice but to turn to the black market when they cannot obtain official foreign exchange quotas or have blocked foreign exchange settlement channels. As a result, the exchange rate of the naira against the U.S. dollar on the black market has fallen even further, thus pushing down the value of the naira as a whole. La, the depreciation of the local currency is accelerating.

In view of the current world economic environment, foreign traders who have trade business with the above countries must do a good job in risk control and beware of risks such as abandoned goods and non-payment by buyers at the destination port, so as to avoid losses caused by both money and goods.

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Author: clsrich