King Dollar Risks Becoming Greenback the Bully
The strength of the US currency risks fracturing global trade.
The beatings will continue until morale improves.
Photograph: Hulton Archive/Getty Images
When does a strong dollar become too strong? “Right now” would be the cry of most emerging-market currencies, not to mention policymakers in Japan. Even the European Central Bank says it’s paying attention to the foreign exchange market.
The relentless rise of Treasury yields is translating directly into dollar strength, laying waste to the value of other currencies. It’s not a crisis yet; but trying to call a top is futile, and the risk of something breaking is increasing. As the US economy becomes ever more internally strong and self-obsessed, emerging-market economies are likely to suffer first and most.