How worried should we be about the strong dollar?

Fears over the outlook for emerging markets have resurfaced over the past few days, with the latest concerns focusing on the impact that a strong dollar will have on EM balance sheets. In our view, much of the doom and gloom is overdone. For most EMs, dollar debts are more manageable than in the past, while a weaker currency will help to boost competitiveness and narrow current account deficits. Our concerns centre on a handful of EMs – Ukraine (inevitably), but also Russia and Turkey.