Will the strong dollar trigger a global recession?

In recent months, a fearful narrative has taken hold in international financial circles: Rising U.S. interest rates are boosting the dollar, forcing cheaper currencies and higher import costs onto economies already struggling with skyrocketing energy and food prices. To keep the lid on soaring inflation, foreign central banks must further tighten their own monetary policies, pushing the world into global recession. Moreover, higher U.S. interest rates and a stronger dollar are putting special pressure on emerging market economies (EMEs), which must buy dollars to repay their dollar debts with ever-cheaper local currencies.

These narratives, scary as they are, frequently appear below even scarier headlines:

“How the surging U.S. dollar is making it almost impossible to afford anything in countries around the world.” (Fortune, Oct. 18)

“Fallout From Rate Moves Won’t Stop the…

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