The United States dominates the world economy now in the 21st century but not the way it used to during mid 20th century or as it did in the last decades. In 1950 the US accounted for around 50% of the World GDP. In 1970, the US accounted for more than 35% of the world's gross domestic product (GDP). Later, in 2020, it dropped to 30%, and in 2021 its share was about 24%.
However, the United States dollar remains dominant in world financial markets. Still, when Emerging Markets and Developing Countries (EMDCs) borrow, their debt is irresistibly denominated in US dollars. The Dollar's economic dominance has massive value in the world economy.
Interestingly, contrary to US GDP in comparison to World GDP, the value of the US dollar is the strongest at this time, depreciating currencies worldwide, including developed countries. The currencies of India and China have dropped 6%-10%. The Eurozone and Britain have also dropped between 11%-15%. The Japanese currency has devalued more than 15% against the US dollar.
A solid dollar pushes down the world economy like never before and impacts everything. Analysts at Bank of America estimated that more than half the rise in the Dollar this year could be explained by the Federal Reserves' comparatively with its aggressive policy of interest rate hikes. And it impacts the day-to-day life of 140 crore Indians and people across the world. It straightforwardly makes Crude oil and natural gas expensive, causing the Cost of living to rise and the Cost of Foreign education to increase.
INR - Indian Rupees fell to a record low of 83.075 against the US dollar recently, Touching another lifetime low; the Indian Rupee has never been volatile this much, touching new lows now and now and then. Before this as well, on October 19, 2022, Indian Rupee plunged 71 paise to hit a low of 83 against the US dollar, following the consistent strengthening of the greenback.
Aditya Shah, Founder of JST Investments, says, "India imports many of its commodities, i.e., buy them in Dollars. Imports meet nearly 80 percent of India's crude oil needs. As the Rupee continues to depreciate, the Current Account Deficit (CAD) will continue to rise to record levels, pushing inflation in the economy."