On Thursday, the 25th of April 2019, the American dollar index, measured against a basket of six major currencies had extended further gains after breaching a critical level of 98,05 yesterday (April 24th). Nevertheless, a sudden leap of US dollar index to a nearly two-year high, had not entirely been resulted by an underlying strength of the American economy, instead weaker major currencies across the world alongside pressurized central banks had resulted in another butchering of major currencies on Thursday’s (April 25th) market, though dollar seemed to be well-fortified by a stack of upbeat economic data, said analysts.
As the US dollar index had added another 0.13 percent on Thursday’s market to 98,20 after reaching a session high of 98.32, concerns over the trembling health of the global economy were renewed and plunged the emerging market currencies to a three-month low, a scenario which closely coincided to the sharp declines of developing economies such as Turkish lira and Argentine Peso witnessed during 2018.
MSCI’s index of emerging market currencies had experienced a plunge for fifth straight session on Thursday’s (April 25th) market closure, and dipped to its lowest level in more than three months, while a roaring American dollar had breached its highest point since June 2017.
Meanwhile, a quarterly US GDP growth due to be released on April 26th, GMT. 12.30, would be closely watched for further directions of the emerging market alongside major currencies. Expressing concern over the future of emerging market giants, likes of Turkish Lira, Russian Ruble, Brazilian Real and South African Rand, a head of FX & EM research at Commerzbank in Frankfurt, Ulrich Leuchtmann said, “With Turkey, there is always a risk that it could get exponentially worse because the central bank waits way too long.
Once the Turkish lira descends into crisis mode, you will feel that in the South African rand, the Brazilian real and even the Russian rouble”.