Board of Governors of the Federal Reserve System

Figure 1. U.S. Dollar against EME Currencies and Episodes of Large EME Currency Depreciations

The figure depicts movements of the U.S. dollar against an equally weighted average of 18 floating EME currencies from January 4, 2010 to August 25, 2023. The index generally trends up, starting at a normalized value of 100 on January 4, 2010 and ending at 173.05 on August 25, 2023.

Higher index values indicate dollar strength. There are 8 periods of large EME currency depreciation shaded throughout 2010 to 2022, indicating the episodes of the study. Each shaded episode is four months. The first shaded episode, the European debt crisis, is from July 22 to November 25, 2011, where the index increases from 94.20 to 107.24. The second shaded episode, taper tantrum, is from May 2 to September 5, 2013, where the index increases from 103.90 to 113.08. The third shaded episode, commodity price declines/global growth concerns, is from November 10, 2014 to March 16, 2015, where the index increases from 120.81 to 135.89. The fourth shaded episode, Renminbi devaluation and China slowdown, is from May 20 to September 23, 2015, where the index increases from 130.84 to 146.78. The fifth shaded episode, U.S. elections, is from August 16 to December 20, 2016, where the index increases from 140.68 to 150.06. The sixth shaded episode, trade tensions/Fed tightening, is from April 11 to August 15, 2018, where the index increases from 137.96 to 150.54. The seventh shaded episode, COVID-19, is from January 2 to May 7, 2020, where the index increases from 149.89 to 169.42. The eighth shaded episode, monetary tightening in advanced economies, is from June 8 to October 12, 2022, where the index increases from 167.13 to 186.18.

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