Deep Dive: All roads lead to a strong dollar as EM currencies hit multi-year lows

‘A drag on global growth’

The US dollar’s strength this year has wreaked havoc among European and emerging market currencies, as markets continue to reward economies with higher interest rates, with little prospect of near-term relief.

On Monday (5 September), the DXY dollar index appreciated to a level not seen since 2001. Year-to-date, the index is up 14.45%, according to Morningstar data. The move was driven by broad-based weakness in other currencies such as sterling, which hit a new record low against the dollar and the euro, which traded below 99 cents to the dollar for the first time in 20 years.  While a flight to safe-haven trades during the current period of high volatility and global uncertainty has been a factor behind the dollar's strength so far this year, the impact of the differing approaches of cent...