Type something to The world is experiencing extreme inflationary pressure, and the debt-to-GDP ratios in the majority of economies are at all-time highs. The consequences of Covid, the conflict between Russia and Ukraine, supply-chain obstructions, and the high dollar, which has increased dollar-denominated indebtedness, are the main causes of this. As import prices rise and export prices stay low, the trade balance in the majority of frontier and emerging economies will widen. In this article, we will discuss how Kenya might profit by renegotiating the prices of export commodities.
How Kenya might profit by renegotiating the prices of export commodities
The debt-to-GDP ratios in the vast majority of economies are at all-time highs, and the global inflationary pressure is at an all-time high. The main causes of this are the effects of COVID, the crisis between Russia and Ukraine, supply-chain impediments, and the high dollar, which has raised debt in dollars. The trade balance will expand in the majority of frontier and emerging economies as import prices increase and export prices remain low.
Also, the country is using a deceptive strategy that raises prices everywhere in order to afford imports and accumulate enough dollar reserves. Their prices for exporting commodities are being renegotiated.
For example, before sending maize out in June, Tanzania required grain traders to secure export permission. In that month, the Tanzanian government raised permit fees by 93%. Kenya continues to get the same amount of maize, but the cost is now borne by the consumer, with Tanzania reaping greater export advantages.
Numerous nations are experiencing the same scenario. South African coal export prices have climbed by 78.93 percent since October of last year, according to financial research site Ycharts. In response to Europe's energy crisis, South Africa's coal shipments to the EU grew by +582.7 percent from January to September 2022. Get Indian Export Data.
The oil producing and exporting (Opec) nations agreed to reduce output by up to two million barrels per day in order to maintain high crude oil prices and boost oil earnings while the globe is still under pressure from high crude oil prices. These nations essentially rely on oil money to balance their budgets and keep their currency reserves.
Further, the Apple increased the cost of a number of its products early this week, including subscriptions to Apple Music and Apple TV+. You realise that American corporations are likewise renegotiating by raising prices when you consider technology to be a commodity.
For the 11 months leading up to August 2022, coffee export revenues in Kenya increased 62.58 percent from the previous year. In this tendency, the governments of each country receive more tax money from the increasing exports while the producers of commodities receive more income from exports.
The strong monetary tightening by the US Federal Reserve, which is boosting demand for the dollar, is one of the reasons causing the big commodities renegotiation.
There is a chance that the inflation rate will increase as a result of these rising commodity prices. It is crucial that policymakers begin renegotiating our commodity pricing because Kenya's import cover reserves are at a seven-year low. Through structural means, value addition and manufacturing could be encouraged.
When it comes to investors and businesses that deal with commodities, you can lock in a commodity price by taking a long position on the markets for commodities in the future. In this approach, if the commodity's price rises in the near future, the value of your futures position increases and the higher price is offset.
On the other hand, if the price of the commodity declines in the near future, the lower price on the commodity market will make up for the loss on your futures position. EximPedia provides reliable Indian Export Data, exporter data and much more. It also enables you to acquire data on the top exporters, Kenya HS Codes; Import to Kenya, etc. We are always available to assist you and expand your business in the global market.
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