IMF warns all countries, spend forex reserves carefully amid rising volatility

IMF on Dollar Increase International Monetary Fund (IMF) in a blog post told all the countries of the world that the foreign exchange reserves should be used carefully amid increasing volatility.

IMF warns all countries, spend forex reserves carefully amid rising volatility
IMF warns all countries, spend forex reserves carefully amid rising volatility, image source: jagran

The International Monetary Fund (IMF) has warned all the countries of the world to keep their foreign exchange reserves safe due to increasing outflows and volatility in the future. The IMF has given this warning at a time when almost all major currencies of the world, including the Indian rupee, are falling sharply against the dollar.

In a blog post, IMF Deputy Managing Director Gita Gopinath and Chief Economist Pierre-Olivier Gourinchas said it is prudent to increase resilience in such a delicate environment. However, developing countries have significantly increased foreign exchange reserves in recent years, reflecting lessons learned from past financial crises. 

Foreign exchange reserves are limited with all countries, so it should be used with caution. Along with this, he wrote that all countries should preserve their foreign exchange reserves to handle increasing outflows and volatility in the future.

Dollar reaches highest level in 22 years

The dollar index, which shows the strength of the dollar, is running at a 22-year high of 113.30. Since the beginning of this year, the world's major currencies such as the yen 22 percent, the euro 13 percent and many developing countries have lost 6 percent against the dollar. 

Inflation rising in the world due to strong dollar

According to Gopinath and Gourinchas, many countries in the world are taking many tough steps to reduce inflation. At the same time, a 10 percent fall in a currency against the dollar increases the inflation rate by 1 percent in that country.