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The US Dollar & Emerging Markets

Apr 21, 2023

View all Malcolm Dorson's ArticlesMalcolm DorsonMalcolm Dorson

Understanding the relationship between the US Dollar (USD) and emerging market (EM) equities is essential for investors in the diverse world of EMs. Historically, EM equities have shown a negative correlation with the dollar. A weak dollar can provide a tailwind for EMs in the form of commodity prices (which are typically priced in USDs) and debt repayments (many EM countries and companies borrow in USDs). Myriad factors impact the performance of EM equities but, as we discuss here, the dollar is always worth watching.

Category: Articles

Topics: Emerging Markets, International Opportunities

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Information provided by Global X Management Company LLC.

Investing involves risk, including the possible loss of principal. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Securities focusing on a single country and narrowly focused investments may be subject to higher volatility.

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information is not intended to be individual or personalized investment or tax advice and should not be used for trading purposes. Please consult a financial advisor or tax professional for more information regarding your investment and/or tax situation.