Increased inflation hurts dollar hegemony
Lowry 22, (Christy Lowry is an independent writer and editing professional for Western Union) “Inflation, Interest & Exchange Rates,” Western Union, 12-9-2022, https://www.westernunion.com/blog/en/us/how-inflation-affects-currency-and-interest-rates/ // EE
When inflation is higher, this tends to have a depressing affect on the value of a country’s currency. This is because increased inflation reduces the currency’s buying power, which weakens it against other currencies. The impact of increasing inflation on currency conversion rates is usually downwards.
How Can Inflation Affect Cross-Border Money Transfers?
In a period of increasing inflation, exchange rates can be more volatile. This means that cross-border money transfers can become more costly. If you routinely send money abroad, perhaps the same number of dollars each month, you may start to see the impact of inflation on the amount of local currency that is received. For example, if you sent $300 to India at the end of September 2021, this would have been INR 22,267 whereas the same $300 sent a year later would have been worth INR 24,541. The dollar weakened against the rupee over this time, which meant that each dollar was worth more rupees. Of course, the reverse can also happen. If the dollar is strengthening against the currency you are converting to then your recipient would receive less local currency.
Making Cross-Border Money Transfers Simple
Using a dedicated money transfer app can make it easier to see how much your recipient will get when you send a cross-border payment. You can use the online Currency Converter or Price Estimator on the Western Union website to understand how much local currency will be received and how much exchange fees will be charged.