My last post, “Emerging Markets. A Time Bomb?”, discussed the impact of a strong U.S. dollar on emerging market sovereigns and companies.
I had a request for a chart to better show the relationship between moves in the dollar and the negative effect it typically has on Emerging Markets.
In the chart below I have drawn a vertical line marking the recent low in the U.S. dollar (December 2020). I also included various measures of EM economies:
Local currency EM bonds (pane 1)
USD EM bonds (pane 2)
EM currencies (pane 3)
EM stock market index (pane 4)
Each of these price series topped in-line or shortly after the bottom in the U.S. dollar and all have experienced significant weakness since that time.
Disclaimer:The content provided on the Capital Notes newsletter is for general information purposes only. No information, materials, services, and other content provided in this post constitute solicitation, recommendation, endorsement or any financial, investment, or other advice. Seek independent professional consultation in the form of legal, financial, and fiscal advice before making any investment decision. Always perform your own due diligence.
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EM vs U.S. Dollar 🇺🇸
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My last post, “Emerging Markets. A Time Bomb?”, discussed the impact of a strong U.S. dollar on emerging market sovereigns and companies.
I had a request for a chart to better show the relationship between moves in the dollar and the negative effect it typically has on Emerging Markets.
In the chart below I have drawn a vertical line marking the recent low in the U.S. dollar (December 2020). I also included various measures of EM economies:
Local currency EM bonds (pane 1)
USD EM bonds (pane 2)
EM currencies (pane 3)
EM stock market index (pane 4)
Each of these price series topped in-line or shortly after the bottom in the U.S. dollar and all have experienced significant weakness since that time.
— Brant
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Disclaimer: The content provided on the Capital Notes newsletter is for general information purposes only. No information, materials, services, and other content provided in this post constitute solicitation, recommendation, endorsement or any financial, investment, or other advice. Seek independent professional consultation in the form of legal, financial, and fiscal advice before making any investment decision. Always perform your own due diligence.