Emerging-Market Currencies Give Developed FX Run for Their Money
- Greenback’s surge more pronounced against DM currency basket
- Commodity-backed EM currencies are standouts amid weakness
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In the battle against the rampant dollar, emerging-market currencies are giving developed-market peers a run for their money, particularly those with commodity-backed economies.
This can be seen in a simple comparison that measures the dollar’s value based on its competitiveness against trading partners. The Federal Reserve’s trade-weighted index for the dollar versus advanced-economy currencies has climbed much faster that its emerging-market equivalent since the start of the greenback’s rally at the beginning of 2021. This year alone, it has surged 8.6%, about four times its 10-year average advance. That compares with a modest gain of around 2.9% in 2022 for the emerging-market gauge, slightly above its 10-year average of about 2.6%.