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Comment by irrational | Hacker News Reader

How does the USD getting stronger lead to economies in other countries collapsing? This is a real question, I really don't understand how or why this would happen.

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Weak economies often have some inflation and thus high interest rates. During the time of almost zero interest rates in the US, people borrowed Dollars and not their local currency to get money cheaper.

The problem arises now that the value of the Dollar is rising. People have to exchange their local currency back into Dollars to pay back their credit loans. They have to pay more than they expected which can be a problem.

Is the value of the Dollar rising, or the value of the local currency falling? I'd say the latter.

Yeah, inflation is not negative, so it doesn't seem reasonable to say that the value of a dollar is rising.

To out-pedanticize (?) your pedantry, by convention currencies are valued against other currencies - this is why the tickers at the bottom of Bloomberg show USD-EUR, USD-CNY, et cetera.

In the context of this thread, you're expected to interpret "the value of the Dollar is rising" as "it costs more Turkish Liras to buy a dollar today than it did yesterday."

I feel like this is missing his point, and he was actually asking if the change in currency value was mainly due to America getting stronger, or due to the other countries getting weaker. So far this comment thread has been fairly US-centric, and I believe he was suggesting it's more that these other countries are just failing, rather than the US doing particularly well.

Currency values don't necessarily correspond to the strength or weakness of a country. Sometimes countries that are strong in terms of GDP, military power, or other metrics intentionally drive down their currency value in order to improve their balance of trade.

In Turkey many businesses were taking out loans denominated in USD or Euros instead of local Turkish Lira.

"The lira sell-off has also meant Turkey's banks are seeing more loans go bad as borrowers struggle to pay off euro- and dollar-denominated debt. For years, Turkish companies borrowed in hard currency, drawn by lower interest rates, but the lira crisis has made it more expensive to repay that."[1]

[1] https://www.cnbc.com/2018/08/03/reuters-america-turkeys-bank...

Most of the other comments have explained it, but I'll also point out that in many developing countries or ones that have recent crashes in their economy, their unofficial-official currency is the US Dollar or, less commonly, the Euro.

USD and EUR are often stand-ins for the country's currency for various reasons. This leads to devaluing of the currency and eventually laws on money exchanging and import of other currency (see also: China).

It costs them more to import goods, because the goods are priced in USD. They may not actually be priced in USD, but as of now, the USD is still the world currency reserve, so most international trade is at least indirectly based on it's perceived value.

Well, these economies (I live in one, travel to another one) have already shaky economies and weak currencies. Let's say you mainly export in EUR but you import most of your living expenses in USD. USD gets stronger and EUR goes down.

Now you might think it is just a few "percentages" but remember these economies are already on shaky grounds so this might trigger the crisis. Certainly, the USD here is not to blame (I don't really believe in all the jewish money central bank crap). But if the USD goes stronger along with the US economy it might destabilize several other countries that have yet to reach the trigger point.

With Turkey there were sanctions put on banks and the Turkish currency devalued immediately after.

It's partly that a strong USD means that people are buying dollars or moving money to the US. More money to the US means less money to others.

It's partly borrowing. Lots of developing nations' loans are denominated in dollars. Meaning that they have to pay back the money in dollars since lenders worry that developing nations/peoples would just devalue their money to pay back their loans if the loans were in pesos, liras, etc. As the USD gets stronger, the loans become more expensive.

https://www.ft.com/content/b0436678-4fa8-11e8-9471-a083af05a...

Mexico had a scare just 2 years ago which Trump's election and the USD gaining a lot on the mexican peso. There were even talk of mexico collapsing if the USD continued to gain strength because of mexico dollar debt issuances.

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