[Asia Economy Reporter Donghoon Jung] Currencies of emerging markets that had benefited from the surge in resource prices are now showing signs of weakening amid the ultra-strong US dollar.
According to major foreign media on the 28th (local time), currencies such as the Brazilian Real, Chilean Peso, and South African Rand, which had been strong against the dollar, have recently weakened.
The value of the Real and Rand against the dollar has fallen by more than 9% over the past three months. This contrasts with early April when the Rand had risen over 8% and the Real over 17% compared to the beginning of the year. According to Bloomberg, the Rand exchange rate, which had fallen to 14.47 Rand per dollar on April 13, rose to 16.07 Rand as of 4 p.m. Korean time on the same day.
The Real exchange rate, which had dropped to 4.59 Real per dollar on April 4, is currently at 5.26 Real, and the Chilean Peso exchange rate, which had fallen to 778.10 Pesos per dollar on March 25, has risen to 911.7 Pesos. In particular, the Chilean Peso, which had benefited from the strong copper prices, is now at an all-time low value.
The US Federal Reserve (Fed) raised the benchmark interest rate by 0.75 percentage points this month, increasing global concerns about stagflation (economic stagnation amid rising inflation). As a result, the soaring prices of raw materials such as crude oil, soybeans, and copper have begun to ease, and investors appear to prefer the US dollar, the key currency, over high-risk emerging market assets.
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