A Strong Dollar Hits The Market And The Emerging Market Currencies Have Been Hit Hard.

Under the gloom of global deflation, many emerging market countries have launched easing policies to save themselves. But in the face of the aggressive dollar, the emerging market currencies have been hit hard, and a large number of capital outflows are also cracking down on investors' confidence in emerging markets.

In the past week, the US dollar index has soared by 2.6%. The US dollar index closed at 97.7251 in the US Eastern time in March 7th, the highest since September 2003.

In February, when the US non farm employment data was eye-catching and the European Central Bank quantitative easing policy was launched, the strength of the US dollar became more and more prominent. The market began to look forward to whether the US dollar index would return to the 100 level after 12 years.

However, there are several unhappy families. The strong dollar has made the emerging markets miserable.

Since the Federal Reserve announced its withdrawal from the QE in October 29, 2014, discussions on the timing of the Fed raising interest are endless. With the rising interest rate expectations, a large number of capital flows back to the us from emerging markets. Emerging market countries are facing the biggest challenge after this financial crisis.

Since 2015, emerging market currencies have been innovating repeatedly, showing a downward trend across the board.

Taking the Indonesian rupiah as an example, in March 4th, the dollar finally broke through the 13000 Indonesian shield's barrier and fell to the 13015 Indonesian shield at the lowest level in nearly 17 years.

At present, the Indonesian rupiah has become the currency in the global currency devaluation to the US dollar third of the currency. According to the press release, 1 US dollars can be 12975 Indonesian shields.

According to industry analysis, if the US dollar breaks through the 13000 barrier to the Indonesian rupiah, the exchange rate of the rupiah is likely to drop further. At the same time, the emergence of a large number of short stop stops will further push the Indonesian shield to depreciate.

It is reported that the last time the Indonesian rupiah collapsed, Indonesia suffered a major blow during the 1998 financial crisis in Southeast Asia.

As for the reason why the exchange rate of the Indonesian shield has dropped sharply, Wang Feilong, a supervisor of ICBC (601398) (Indonesia), said in an interview: "on the one hand, the United States

The change has led to a fall in the exchange rate of the Indonesian rupiah. At the same time, with the rapid growth of trade between China and Indonesia in recent years, if China's economy slows down, it will also have a negative impact on the Indonesian economy. "

At the same time, he stressed that Indonesia is a free economy, and the government and the central bank do not have enough foreign exchange reserves to intervene and regulate the exchange rate of money.

Apart from Indonesia, other emerging market countries are having a bad time.

To cope with the weak economic forecast, many emerging market countries have adopted interest rate cuts or other easing measures to further devalue their currencies.

Last week, Turkey's currency lira dropped to a historical low; Brazil currency Real once touched the lowest level in more than 20 years; the spot dollar exchange rate of RMB against the dollar rose slightly, but it also hit a new low since October 2012, and last Friday (March 6th), the spot rate of the people's dollar against the dollar closed at 6.2620.

Although currency devaluation helps to raise

The export will stimulate the economy, but at the same time, the depreciation of the local currency will lead to the pressure of capital outflow and high inflation.

WinThin, head of monetary strategy at global emerging markets, Brown, Harriman, BBH, said that although all countries have their own problems, the overall weakness of emerging market countries reflects the continuing concern among investors about these countries.

Data show that last year, the global emerging market fund outflow of $23 billion, the largest since 2011.

Flow out.

The data provided by Morgan Stanley Capital International Inc (MSCI) show that in February this year, capital flows to emerging market countries also showed a marked slowdown.

Market analysis predicts that as the US Federal Reserve raises interest rates, the capital outflow of emerging markets will become more intense this year. Countries with financial and current account double deficits such as Brazil, India and Turkey are particularly vulnerable.

Bloomberg's previous survey of strategist forecasts shows that 15 of the 23 emerging market currencies are expected to fall this year, including Argentina pesos and Czech Kronos.

"The internal structural problems of emerging economies are also difficult to solve in the short term, and the superposition of multiple factors will lead to a fall in emerging market currencies."

Bloomberg strategist said.

But recently, in a media interview, Zeng, director of the banking research office of the Financial Research Institute of the Chinese Academy of Social Sciences, said that although the emerging market currencies remained weak this year, the Latin American debt crisis and the Asian financial crisis would not happen again.

On the one hand, emerging economies have been readjustment and preparation after the crisis, such as controlling the size of short-term external debt and reducing currency mismatches; on the other hand, the Fed's policy is more pparent, and the pace of interest rate hike will not be too fast in the future, and the market has anticipated the increase in interest rates.

In addition, the monetary policy of all other economies is relatively loose compared with that of the United States. Even if capital outflows exist, emerging economies can also seek other sources of money, such as the euro and yen.

Zeng Gang said.