Strengthening dollar will rattle the rest of the world
The prospect of higher American interest rates has pushed the value of the dollar up by 1.5% against a broad basket of currencies over the past four weeks.
Countries and firms that have borrowed in dollars but lack sources of dollar revenue, a rising greenback mechanically bloats their debt burden and boosts their interest costs.
Higher interest rates in America, coupled with a rising dollar, also makes investing in the rest of the world less attractive.
Capital tends to flow out from emerging markets, forcing them to raise interest rates as well, tightening monetary conditions just when their economies may start to suffer from a general trade slowdown.
The Economist 10 November 2024
Tillbaka till Rolfs länktips 11 November 2024
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