Ambrose strong dollar lead to credit crunch
As the Fed’s broad dollar index pushes towards an all-time high of 130, the mechanical effects will expose the Achilles Heel of an international system that has never been more dollarized - and never been more sensitive to US interest rates since the end of the Bretton Woods era.
King dollar will tighten the noose on emerging market debtors with $3.5 trillion of liabilities in US currency.
It will force banks in Europe - through complex hedging contracts - to curtail offshore lending to the Pacific Rim, Turkey, Russia, Brazil, and South Africa.
It will lead to a credit crunch in the developing world.
Kommentarer