THE strong US-dollar narrative backed by the US Federal Reserve’s (Fed) aggressive rate hiking has put some advanced economies and many emerging markets’ currencies, including the Malaysian ringgit under considerable pressures since March 2022.
The strong US dollar will have spillover effects on emerging economies via trade and financial channels. The spillover via financial channel is disproportionate in terms of credit supply and liquidity conditions, volatile capital flows, the impact of tightening monetary policy on investment and consumption as well as on the stock market.
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