A former US Treasury Secretary coined a phrase that stuck when asked what his government would do about the weak dollar; “it’s our currency but it’s YOUR problem”!

That pretty much sums up the situation today. The US dollar has hit a recent low against the Euro and the Pound Sterling but the US Federal Reserve Bank is none too concerned as it concentrates on warding off the impending recession and credit crisis. This is a complex situation that is as much beneficial as it is dangerous for the American economy.

A weak dollar makes American exports more affordable but it increases the price of oil and hence ultimately all goods. The dollar is not just the currency of America; it is the currency of the world much like the ancient Roman Sistirci or the Pound Sterling of years ago.

The world economy moves in sync with the US economy; when it’s in good condition so are we. When the Americans sneeze, we get a cold; we are all interlinked in the globalized economy where no man is alone. The dollar has been on a downward trajectory for more than a decade.

As a result of the rise of China, American Treasurers have sought to lower the value of the dollar in order to compete with Chinese exports, which are made at a fraction of the cost of their American competitors.

The US in the nineties found its manufacturing sector losing out to its Chinese counterpart while its economy became weakened by home industries relocating to cheaper locations like Vietnam and Mexico. Though the American exports could compete in terms of quality when it came down to just cost they were outdone.

When the former Chairman of the Federal Reserve Bank at the time, Alan Greenspan, one of the greatest economists of our time, moved, markets jumped. He watched, year after year, as the dollar slid against all major currencies leading to people assuming this was actual policy. For, it was assumed, the maestro would have acted if he thought that it bad for the economy.

Now retired, Alan Greenspan has since predicted that the dollar will lose even more value. US exports begun to rise in turn with the dollar falling; now American exports were out competing their European counterparts with British exports suffering the most due to the strong pound.

The weaker dollar saved many manufacturing sector jobs which were being shed as volumes rose while profits remained the same. This led to a large section of manufacturing firms going out of business; this period coincided with the consolidation of the sector as larger firms bought up smaller ones. Once the exports were tied to the lower dollar there was little chance of the dollar rising again.

In most Third World countries the dollar is the unofficial currency, accepted without exception. A number of countries (13) peg their currency to the dollar. Most international commodities are bought and sold in dollars be it oil, steel, wheat, you name it.

Oddly, the majority of dollar bills are in circulation outside the borders of the United States. China is estimated to have more than a $1.43 trillion in State coffers and it is using this war chest to buy influence in the Western economy like its recent purchase of 15% of banking giant Goldman Sachs. The America Treasury isn’t happy about this but is powerless to act as it can not force the Chinese to return their hard-earned dollars.

Money is a curious thing; just a piece of paper that we all agree is worth whatever we say it is worth. Right now the dollar is low but it still has the safest value of any currency. It is all about time; eventually the dollar will rise and some lucky person will have more money than they had before, just like that.

The real problem is not the dollar but the potential recession in the US and the world in general. If there is a global downturn then it will not matter how low the dollar is. The main factor in all this is rarely spoken about; the dollar though by far the most dominant global currency, is no longer the main reserve currency. Central banks now spread the risk by investing in a basket of currencies as opposed to the dollar exclusively. The market has responded to the weak dollar by diversifying into commodities; oil, steel, gold, wheat and even water are at record prices for peace time.

The dollar has wildly fluctuated against various currencies; against the pound sterling it’s almost lost twice its value. Against the Euro, it started on parity when the Euro was enacted in 1999, to $1.48 to the Euro. The most serious deficit is with the Chinese Yuan despite China’s refusal to revalue their currency. The Japanese Yen has also been re-valued and is really high against the dollar adding further pressure.

A credit crunch is looming and a weak dollar might help the situation by softening the impact as billions of dollars are written off in bad debt. It is better if that bad debt is in weak, not strong, dollars. The Federal Reserve under Ben Bernanke has been heavily focused on cutting interest rates to make money available to banks; the weak dollar has been a secondary concern.

Rwandans have been seeing the effects of this weak dollar as the prices of basic foodstuffs and imported goods have been creeping up, the rise of oil prices is another pressure. When one goes to the market you now get slightly fewer tomatoes than you got last month; the tomatoes require petrol to drive them from farm to market and petrol is pegged to the dollar.

Here is a table showing the average price rises of basic goods


Previous price

Current price

% increase





























USA oil




Basmati rice








(Source: New Times)

What this table shows is that traders are speculating and increasing prices at a higher rate than the rise of the price of Oil or the fluctuation of the dollar.

When one tries to rent a house is an affluent area of Kigali, the price is up because it is measured in dollars. Anyone involved in import/export is affected, retailers are affected and ultimately customers have to pay higher prices. From New York to Nyabugogo, the wheels of the global economy grind swiftly and affect each other; we are connected and intertwined. The weak dollar is a momentary blip in of a problem; Rwanda will go regardless, as we are caught in a full economic boom. Rwandans will also diversify the hard currencies they use in importing/exporting as the Euro has gained local value. The weaker dollar is better for Rwanda as investors can get more value for money in Rwanda. As inevitably as the sun will rise, so will the dollar, as it will be the world’s premier monetary unit for the foreseeable future.




This New York Times blog is a delight to read even for people who are not particularly enamored with business and economics. If you think economics could never be fun or ‘hip’, this site will prove you wrong. Written by Steven Leavitt who wrote the massively popular book ‘Freakonomics, it looks at the more unconventional side of economics; written with wit and genuinely fascinating, Business Rwanda highly recommends it.


This is another fascinating blog in the same vein as the one above though this one is more link-based. There are dozens of links everyday on major developments and studies in economics, trade and finance and it is almost always illuminating. It’s a great way to be at the cutting-edge of modern economics.


The Economist magazine is widely known as one of the major authorities on world business but sadly many of the articles on this website cannot be read without a subscription on their website. This is why their blog ‘Free Exchange’ is highly welcome and gives the magazine a chance to tackle all the crucial issues in a more informal way.


This is the website for the Financial Times newspaper, possibly the media source which has the final say on all things financial. It covers the markets and most business stories comprehensively although those who do not fancy themselves as experts will find the lingo and the dry academic prose a bit heavy to deal with.


This is the business section of the acclaimed British paper The Times. It’s mainly centered on British business news although there is a world business news section.  


The Time magazine website has a business and technology page which is comprehensive and it offers fascinating interactions between business and politics in many of its comment pieces. This is a handy guide.


Mr. Larry Edwards was the first foreigner to attend the annual Rwandan governmental retreat, where he endeavored to market technologies in Oklahoma and highlight the benefits of an economic relationship between Rwanda and Oklahoma. Edwards is the  CEO of AEon Group of companies, with offices at the ICT park here in Kigali. He also heads the Global Fusion Foundation (GFF).  This year the Global Fusion centennial business conference took place from October 7th to October 12th in Oklahoma City with the objective of organizing opportunities and partners to invest in countries like Rwanda, Kenya and Tanzania. 

Attended by a variety of entrepreneurs, government agencies, investors, service providers and non-profit institutions, this foundation, created in 2005, is involved in export promotion and import assistance and global sourcing of products and services for member countries. This singular event showcased Oklahoma to the world as the Gateway to the U. S. Market and, conversely, the Gateway to the world for Oklahoma and other U. S. companies. 

As part of the week-long conference, the ambassador of Rwanda to the United States, H.E James Kimonyo gave a presentation at the Gaylord Hall  at the Oklahoma Christian University coined “The Rwandan Renaissance”. The theme for the dinner was actually “The Singapore of Africa-The Rwandan example” and was attended by the ambassador of Kenya to the US, HRH Joseph Dubois, US senators, the president of Oklahoma Christian University, representative from Rwanda’s private sector, and American businessmen. 

Rwanda was portrayed as the ideal investment setting in Africa. The ambassador highlighted the improvements Rwanda is making in Transport and telecommunications, education, customs procedures to ease work for investors and tourism. GFF is organizing a visit to Rwanda for American investors to ‘test the waters’.  

During the visit, the investors will meet presidents Paul Kagame and Mwai Kibaki as well as US ambassadors Michael Arietti (Rwanda) and Michael Renneberger (Kenya). The foundation will also hold conferences in Nairobi and Kigali with delegates from all over the region.