A strong US dollar is a threat to countries with lots of foreign currency debt and/or inflation problems. If Asian currencies remain under downward pressure we expect policymakers to step up their intervention in foreign exchange markets. Another option would be for central banks to follow the lead of Bank Indonesia and hike interest rates. However, lacklustre growth prospects mean central banks will be reluctant to tighten further.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services