Is the battle of emerging markets with the dollar over?

It is expected that the assets of developing countries will witness a recovery in the global markets with the acceleration of the growth in demand for the commodities of these countries.

Emerging economic markets were once again talked about, after speculations about new challenges that the currencies of these countries will face against the US dollar.

After a record exit of the dollar from the emerging economic markets in early 2022, these countries are building their reserves once again in dollars to support the strength of local currencies. But it is not enough to withstand the US Federal Reserve's moves to raise interest rates on the dollar.

Emerging markets are on the verge of a surge in the dollar

The "Bloomberg" report showed that emerging markets are on the verge of a new wave of the rise of the dollar in light of the latest rise in the green currency, and the sudden rise in US inflation, and that the Federal Reserve has not yet finished the course of raising interest rates, and there is a wide state of uncertainty about the prospects for inflation and the recession of the economy global this year.

The recovery of emerging market economies

At the same time, expectations emerged for the recovery of emerging market economies, and the prospects for economic recovery in China and the shift in US Federal policy in 2023 support the hopes of speculators on the rise in emerging markets, and some believe that the situation is ripe for a broad and long-awaited recovery in the asset class, according to the “channel” website. Al-Arabiya” on January 9, 2023.

Developing country assets are expected to lead a rebound in global markets once the bulls begin to take control again, also as demand growth for developing country goods, driven by politics in China, accelerates.

Recovery of monetary reserves of emerging economies

Meanwhile, emerging markets have partially recovered, and as a result of US dollar inflows, India, South Korea, Taiwan and Southeast Asian countries have recovered approximately $132 billion in funds that have exited since last November 2022, more than half of what was lost last year. The green currency is declining from the values of its investment portfolios.

India spearheaded a campaign among central banks in emerging Asian markets to rebuild their foreign exchange reserves to help them defend their currencies in the event of a resurgence of the US dollar, and the Indian rupee improved from its peers in emerging markets, in part because the Reserve Bank of India was the most advanced in rebuilding reserves. foreign cash.