OPINION: An undervalued local currency is arguably good for little more than buying Big Macs at home, as geopolitical, pandemic and supply chain chaos funnel more capital into the safety of US dollars.
The global monetary chaos unleashed by the pandemic and Russia’s invasion of Ukraine has sparked a scramble into the surging US dollar and left much of the rest of the world holding something resembling Big Mac money.
The broader picture is that of geopolitical, pandemic and supply chain chaos funnelling more capital into the safety of US dollars. This has seen the DXY Index – as a measure of the US dollar’s value against six major trading partners – surge 11.9 per cent from 89.97 to 102.08 over the past 12 months.
Arguably, the Big Sats Index measures just how badly public trust has eroded in the value of what some see as useless Big Mac money that penalises savers with negative real yields.European wage slaves subject to its half-enacted monetary union under the European Central Bank look especially vulnerable as the euro’s slide versus the greenback continues.
In April, the ECB kept interest rates negative and flagged another €90 billion in cash to be pumped into its financial system via bond purchases,As the ECB signals the potential for a July rate hike, it’s also making noises about a new emergency monetary tool to help keep a lid on the longer-dated bond yields of overly leveraged southern member states like Italy.
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