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Dear maria, We just published a new blog—please find the full text below.  How Countries Should Respond to the Strong Dollar (Photo: AdobeStock) By Gita Gopinath and Pierre-Olivier Gourinchas The dollar is at its highest level since 2000, having appreciated 22 percent against the yen, 13 percent against the Euro and 6 percent against emerging market currencies since the start of this year. Such a sharp strengthening of the dollar in a matter of months has sizable macroeconomic implications for almost all countries, given the dominance of the dollar in international trade and finance. While the US share in world merchandise exports has declined from 12 percent to 8 percent since 2000, the dollar’s share in world exports has held around 40 percent. For many countries fighting to bring down inflation, the weakening of their currencies relative to the dollar has made the fight harder. On average, the estimated pass-through of a 10 percent dollar appreciation into inflation is 1 percent. Such pressures are especially acute in emerging markets, reflecting their higher import dependency and greater share of dollar-invoiced imports compared with advanced economies. The dollar’s appreciation also is reverberating through balance sheets around the world. Approximately half of all cross-border loans and international debt securities are denominated in US dollars. While emerging market governments have made progress in issuing debt in their own currency, their private corporate sectors have high levels of dollar-denominated debt. As world interest rates rise, financial conditions have tightened considerably for many countries. A stronger dollar only compounds these pressures, especially for some emerging market and many low-income countries that are already at a high risk of debt distress. In these circumstances, should countries actively support their currencies? Several countries are resorting to foreign exchange interventions. Total foreign reserves held by emerging market and developing economies fell by more than 6 percent in the first seven months of this year.

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14 October 2022 Update

NATO steps up support for Ukraine, strengthens deterrence and defence NATO will further step up support for Ukraine, while strengthening the Alliance’s defence and deterrence and working to increase the protection of critical infrastructure, Secretary General Jens Stoltenberg said on 13 October 2022. READ MORE

NATO’s annual nuclear exercise gets underway Air forces from across NATO will exercise nuclear deterrence capabilities involving dozens of aircraft over north-western Europe starting on 17 October 2022. The exercise, which runs until 30 October, is a routine, recurring training activity and it is not linked to any current world events. READ MORE Secretary General welcomes US Secretary of Defense to meeting of NATO Defence Ministers Mr Stoltenberg thanked Secretary Austin for his strong personal leadership, as well as the US’ steadfast commitment to the Alliance, and its powerful support to Ukraine. READ MORE 14 NATO Allies and Finland agree to boost European air defence capabilities Defence Ministers from 14 NATO Allies and Finland came together in Brussels on 13 October 2022 to sign a Letter of Intent for the development of a “European Sky Shield Initiative”. READ MORE NATO Secretary General takes part in B9 Defence Ministers’ meeting NATO Secretary General Jens Stoltenberg attended the Bucharest Nine (B9) Defence Ministers’ meeting at NATO Headquarters on 14 October 2022. READ MORE Secretary General: NATO Defence Ministers meet at a pivotal moment for our security NATO Secretary General Jens Stoltenberg outlined the key decisions to be taken by Allied Defence Ministers at their meetings in Brussels on 12-13 October 2022, calling this ''a pivotal moment for our security''. READ MORE Deputy Secretary General reaffirms NATO commitment to Western Balkans Deputy Secretary General Mircea Geoană reaffirmed NATO’s strong and unwavering commitment to peace and stability in the Western Balkans at the 2BS (To Be Secure) Forum on 7 October 2022. READ MORE Deputy Secretary General emphasises importance of NATO-EU partnership at EU Ambassadors Conference Deputy Secretary General Mircea Geoană spoke at the 2022 European Union Ambassadors' Conference on 12 October 2022, praising the close cooperation between NATO and the EU, based on shared values, visions and a similar strategic outlook. READ MORE Deputy Secretary General underscores NATO’s deepening partnership with Republic of Moldova Deputy Secretary General Mircea Geoană met Defence Minister Anatolie Nosatîi of the Republic of Moldova at NATO Headquarters on 12 October 2022, praising Moldova for its contributions to international security, and underlining NATO’s commitment to deepening its partnership with Chișinău. READ MORE NATO Allies take further steps towards responsible use of AI, data, autonomy and digital transformation On 13 October 2022, NATO Defence Ministers agreed to establish a Review Board to govern the responsible development and use of artificial intelligence (AI) and data across the NATO Enterprise. READ MORE NATO Deputy Secretary General underlines importance of ''strategic solidarity'' between Europe and North America Speaking at a European Union budget conference in Brussels on 10 October 2022, Deputy Secretary General Mircea Geoană called for “strategic solidarity” between Europe and North America as the best response to a more dangerous and unpredictable security environment. READ MORE Independent Scientific Evaluation Group returns to NATO Headquarters For more than 60 years, NATO's Science for Peace and Security Programme has been supporting and promoting international cooperation on civil science and technology, and the Independent Scientific Evaluation Group is a key part of this vital work. READ MORE NATO forces participate in UK-led Exercise Joint Warrior More than 11,000 personnel from NATO countries participated in Exercise Joint Warrior. The biannual exercise included defence against simulated attacks above, on and below the water – extending from Cape Wrath and the Hebrides in the north, to the North Sea and the western Channel. READ MORE The people behind the policies: integrating gender perspectives into the military NATO, as a political and military alliance, has a robust institutional framework comprised of dedicated civilian and military staff. READ MORE Youth, peace and security: What is it and why should we care? Today’s generation of youth is the largest the world has ever known, and young women and men are often forming the majority of the population in countries affected by violence and armed conflicts. Their input in security is therefore essential. READ MORE 14 October is World Standards Day Without standardization, it is impossible to have interoperability across 30 NATO Allies. A common set of standards allows for more efficient use of resources and thus enhances the Alliance’s operational effectiveness. WATCH VIDEO THIS WEEK IN PICTURES