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Surge in Dollar Provokes Jitters in Emerging Markets Around World 

December 7, 2016

Landon Thomas Jr., THe New York Times

The election of Donald J. Trump has set off a monthlong run of investor ebullience, whose highlight has been a sustained increase in the value of the dollar against the world’s currencies.

It is a surge that has been embraced on Wall Street as a powerful emblem for a United States economy potentially poised to hit a higher gear thanks to tax cuts, government spending and regulatory relief — policy measures that the president-elect has promised to enact immediately.

But around the globe, the surge in the dollar is provoking financial jitters.

Emerging market countries and corporations that have been binging on cheap dollar debt for more than a decade now face a spike in servicing costs and elevated debt burdens.

And the global financial giants — banks, insurance companies and mutual, pension and sovereign wealth funds — that have financed this $10 trillion borrowing bonanza must confront a period of higher interest rates and tighter financial conditions that will make them less willing to extend credit to companies and investors alike.

“It is the ubiquitous nature of the dollar and its role in the global banking system,” said Hyun Song Shin, the head of research at the Bank of International Settlements, a forum for global central banks. Read more

 
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