Emerging-market currencies have tumbled this year as the dollar has gone from strength to strength. Taiwan’s currency dropped to the lowest level in almost eight years this week, India’s rupee slumped to a record, and Malaysia’s ringgit is close to the weakest since the Asian financial crisis in 1998. All except one of the 23 main developing-nation currencies tracked by Bloomberg have fallen against the greenback this year.
The big tailwind behind the dollar has been US “exceptionalism.” While much of the world economy is only seeing moderate growth, American data from employment to retail sales to inflation has frequently beaten analysts’ forecasts. This has led traders to trim back bets on Federal Reserve interest-rate cuts, which has helped fuel gains in the greenback. The Bloomberg Dollar Spot Index, which tracks the US currency against 12 of its major peers, has risen by more than 4% this year.
