Ecuador’s exports have increased Expensive With Strengthening The Dollars. It is estimated that this trend will continue to grow throughout 2022.

This process has been going on since last year and is responding to it Economic revival After the United States ExtremeWhich has been faster than others Economy. At the same time, the rise in interest rates by the Federal Reserve (Fed) has made it more attractive to invest in dollars, which has further appreciated the US dollar.

On March 16, the Fed raised interest rates by 0.25 percentage points. They are currently located between 0.25% and 0.50%, after being in zero for several years. The latter was intended to reactivate the economy through cheap credit, which became important during the epidemic.

Now the appreciation of the dollar means that the product is sold Coin It costs more in Euros, Pesos, Souls or Yen. For this reason, one effect of the appreciation of the dollar is the increase in the price of Ecuador’s exports. On the other hand, those who export to Ecuador are now more competitive because their products are cheaper.
Javier Rosero, Executive Vice President of the Ecuadorian Federation of Exporters (FedExpore), Explaining that it is now more profitable for countries in the region to export to a country with a stronger currency, as in the case of Ecuador.

However, for countries whose currencies have been devalued, buying from Ecuador is less attractive. As a result of the war between Russia and Ukraine, the currencies of the G7 countries have weakened by as much as 7% against the euro, yen, yuan and other dollars. The same thing has happened with the currencies of Latin American countries, where Ecuador exports, such as Colombia or Peru, have reassured Rosario.

With problems in Market EurasianFor attack UkraineExporters of bananas, shrimps, flowers and other nationalities are facing bigger problems as they will have to find alternative markets in addition to losing competition due to rising dollar prices.

More expensive loans

Increase in Rate From Interest The United States also has an impact on the financial sector.
According to former finance minister Fasto Ortiz, this affects whether the government needs to reconsider its current commitments or seek new external funding.

In the first case, there will be an effect if the current obligations have a variable interest rate, which can be adjusted according to the economic context and increase the financial cost. For now, most interest rates are fixed.

However, towards new loans, if the government decides to issue bonds in the international market, these will be more expensive. Earlier this year, the government announced that it was analyzing this source of funding, but in the current context: higher income from oil sales and less favorable loan conditions, it was not reconsidered.

Currently, Treasury funding needs about 9 9 billion.
For now, the export sector, as well as the Treasury, needs to pay attention to the diversity registered by interest rates in the United States. The Fed has indicated that it will make further adjustments throughout the year to keep inflation in check.

By admin

Leave a Reply

Your email address will not be published.