High US Dollar may bring bankruptcies

High US Dollar may bring bankruptcies

High US Dollar may bring bankruptcies
Companies are taking loans in the US dollars actively. However, while the US currency climbs, it is getting harder and harder to deal with these debts, thus a bankruptcy wave appears.

US dollar at historical highs For quite long time, US haters expected that the United States is going to collapse sooner or later. However, for more than 50 years the US has been the world’s leading economy with the rising greenback. The US dollar confidently breaks through historical highs against the euro, pound and yen, while the currencies of developing economies cannot resist it at all.

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The Brazilian real, Turkish lira and South African rand reached fresh historical lows against the greenback. As long as the officials of the US Federal Reserve System give no clear clues over the start of the interest rates hike, the strong dollar “game” will go on. Its rate is underpinned by expectations of the toughening of the monetary policy. Problems in developing economies the regulators of which, on the contrary, cut their interest rates became another boosting factor for the US currency. “We are seeing the largest weaknesses in some of the familiar emerging markets like South Africa, Turkey and Brazil,” said William Jackson, senior emerging markets economist at Capital Economics. However, experienced analysts do not take the current situation for something extraordinary. Over the existence of floating exchange rates, such a behavior of the greenback was quite rare and was followed by serious slackness on developing markets. So, now the same thing has happened.

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