At present, the Fed`s [hawkish" stance has become clearer, and the uncertainty of global economic growth has increased in the context of repeated epidemics. Analysts believe that with the tightening of the US dollar`s liquidity and the emergence of its hedging function, the US dollar is expected to further appreciate in 2022. The negative impact on global asset prices and the global economy, especially the economic recovery of emerging market countries, is worthy of vigilance.
Multiple factors push up the dollar
In the first half of 2021, under the background of the Fed's ultra-loose monetary policy, the U.S. dollar remained weak and fluctuated as a whole. Since June, the U.S. dollar exchange rate has fluctuated upwards and has continued to rise. On December 31, the U.S. dollar index, which measures the U.S. dollar against six major currencies, closed at 95.5916 points, an increase of 6.2% compared to the end of 2020.
Wells Fargo Securities Co. analysts believe that the trend of the dollar's strength against most currencies will continue until the beginning of 2023, and emerging market currencies are likely to face the risk of depreciation in 2022.
The Bank of America`s Global Research Department stated that some emerging markets are prepared for the Fed`s tightening of monetary policy. For those economies with sufficient foreign exchange reserves, reasonable valuations of local currencies, and relatively small capital inflows, the impact of the appreciation of the U.S. dollar may be expected. limited.