A strong US dollar is adding to the pain for emerging market currencies

Investors are betting a prolonged US dollar rally will affect currencies ranging from the Hungarian forint to the Philippine peso, with the Polish forint and zloty hitting new lows recently. The lingering losses are yet another example of how dollar strength is spreading through emerging market currencies and pressuring central banks around the globe to exchange rate appreciation — even at the expense of a recession.

“Trouble is coming in emerging markets,” says Megan Greeneglobal economist and senior fellow at the Harvard Kennedy School, only about Sri Lanka’s sovereign debt crisis and foreign exchange reserves are exhausted. “It’s a familiar story in emerging markets and a glimpse into what’s to come.”

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