This Dollar Chart Is Bad News for Emerging Markets
Commodities crash or credit crunch, a rising U.S. dollar doesn’t look good for EM
Farmers prepare rice prior to harvesting in a paddy field in Bang Sai, Ayutthaya province, Thailand.
Photographer: Dario Pignatelli/BloombergThis article is for subscribers only.
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.