Geopolitical risks of the Russia-Ukraine war and the Federal Reserve's ultra-hawkish rate hike pushed the dollar index up to 100. If the Fed's balance sheet is reduced from US$8.96 trillion to US$6 trillion, the rising US dollar exchange rate may be the new normal in the future. This will be like a mirror, countries and enterprises with poor health will show their original shape, and funds will flow back to the US dollar system. Most emerging market currencies fell sharply, with Turkey and Argentina the worst.
Russia’s invasion of Ukraine has changed geopolitical risks, and the U.S. dollar has become a major safe-haven currency again. The strength of the U.S. dollar stands out. , the stock market crashed. However, this time, with high inflation raging, coupled with the fueling of war, high oil prices and rising food prices, the world will undergo even greater changes.
This week the Taiwan dollar has depreciated to 28.917, the yen 124.99, the Korean won 1246.87, the Indian rupee 77.16, the euro 1.08 and the pound 1.3.
"Most emerging market currencies have plummeted, and the worst are Turkey and Argentina." The first impact on the return of funds to the dollar system is the emerging countries with poor health, especially those who have actively participated in the Belt and Road in recent years. emerging countries along the way.
Analyzed that after the war between Russia and Ukraine, Sri Lanka, which was exhausted, was on the verge of bankruptcy, and people took to the streets to protest. In Peru, South America, people set fires everywhere because of rising fuel and food prices. The recent Kazakh government is also in jeopardy. The rise in the exchange rate of the US dollar and the rise in oil prices and agricultural product prices will make the poor in emerging market economies even more difficult.
It is believed that in addition to facing the Russian-Ukrainian war, the United States has made combating inflation its primary goal. In the past few days, the 10-year and 30-year U.S. bond yields have surged to 2.7%, and the inversion of interest rates has not been resolved. With monthly debt reductions of $95 billion, if the Fed balance sheet is to be reduced from $8.96 trillion to At US$6 trillion, the rising US dollar exchange rate may be the new normal in the future. This will be like a mirror, and countries and enterprises with poor health will show their original shape. This is a big knockout match!
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