According to Jinshi, Kamakshya Trivedi, an analyst at Goldman Sachs Group, said that the strength of the US dollar poses a "sinister" threat to emerging markets, prompting more vulnerable regions to think twice about cutting interest rates to defend their currencies. He believes that while the strong dollar was associated with strong economic growth earlier this year, it may now be more related to hawkish policies or high inflation. This combination of factors poses a new challenge to emerging markets.
Countries including Indonesia and South Korea could face more pressure, but the impact will be felt widely, he said, pointing to last week's rate decisions in Mexico and Brazil, where Mexico kept rates unchanged and Brazil slowed the pace of its easing cycle to 25 basis points.
Trivedi expects that in the coming months, we will see the European Central Bank and the Bank of England cut interest rates earlier and possibly more sharply than the Fed, which should keep the dollar strong for longer.