Dollar, the King?

More than $9T has been used by central banks worldwide to help soften the blow to their economies caused by COVID-19. The decade old bull run in US stock markets is over and there is only one safe haven everyone is banking on and it's not Gold, it's the Dollar. For all the talk that the dollar would lose its reserve currency status, the last couple of weeks has proved to be just that, talk.

Emerging markets have suffered most from the rise of the dollar. Indonesia’s Rupiah lost almost 14% of its value, and the Russian Ruble and Mexican Peso have lost 20%. The British Pound has lost more than 10% of its value to a low of $1.14, level last seen in 1985. This is especially problematic for emerging market economies, who might have to cut interest rates undermining their currencies further to meet obligations on their dollar denominated debt.

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