Martin Luther Oketch
2 January 2008
Kampala — A looming global slump is predicted following revelations that the US dollar global reserve holding against other major currencies has fallen drastically in the last eight years.
The International Monetary Fund said on December 28, 2007 that the dollar's portion of global currency reserves has declined to 63.8 per cent from 71.1 per cent in March 1999.
The dollar has been the world's reserve currency since World War II, but it weakened against 14 of the 16 actively traded currencies this year. Many countries have their foreign reserves in dollar terms; Uganda is among the countries that calculate its foreign reserves in dollar terms.
The period covered by the latest IMF figures included the eruption of the US sub prime mortgage crisis and the financial market turmoil, which it says is one of the reasons why the global most traded currency has depreciated so fast.
Lately, there dollar on the local scene has depreciating against the Ugandan shillings as well on accounts offshore investors and remittances plus increased earning from exports.
Since its weakening there is growing fears that global economy could go into a recession as Central Banks and investors diversify to other hard currencies, which may be as popular as the greenback.
Some analysts have however dismissed the IMF prediction saying that the greenback still counts and will regain its place.
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