By Isaac Cohen*
During the last nine consecutive weeks, the US dollar has increased against several major currencies, the longest climb in 17 years. As a consequence, stocks went down and the yield on 10 year US Treasury bonds rose, while gold and most commodities declined.
The markets are anticipating what is perceived as the coming increase in US interest rates, expected to happen around the middle of next year. Additionally, the expectation that interest rates will remain low in Europe and Japan makes dollar yields more attractive.
For instance the yen went down to 107.35 per dollar, a quote not seen since 2008, while the euro fell to 1.29 dollars, the lowest rate in 14 months. Most commodity prices went down, gold declined 0.6 percent, to $1,231.50, the lowest price in 8 months and crude oil futures also went down 0.6 percent, to $92.27 per barrel.
The fall in commodity prices, together with the anticipated interest rate increase in the United States, are slowing the performance of emerging market economies. In Latin America, Brazil is in recession, in a presidential election year, while regional growth projections for this year have been revised downward, particularly in stellar economic growth performers, such as Chile and Peru.
*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC.