This Dollar Chart Is Bad News for Emerging Markets

“If history is any guide, emerging markets are headed for trouble as the dollar strengthens. A soaring U.S. currency, coupled with higher interest rates and lower commodity prices, triggered debt defaults in Latin America in the 1980s. A decade later, the dollar’s appreciation forced Asian countries from Thailand to Malaysia to drop their peg to the greenback, and threw the region into a crisis. As in the past, a strong dollar and the prospect for higher borrowing costs in the U.S. are now lowering commodity prices, reducing exports from countries such as Brazil, South Africa, and Russia. It’s also luring capital away from developing nations, slowing their credit expansion and dragging down economic growth, according to Julian Brigden, managing partner at research firm Macro Intelligence 2 Partners.” (VIEW LINK)