The Impact Of A US Dollar Crash On Asia

BMI’s latest scenario test exercise indicates that a sharp depreciation of the US dollar would have a significantly adverse effect on the global economy. Although it would bring the US current account deficit back towards a sustainable level, a dollar correction would have negative consequences for other developed countries, as well as for emerging markets. Outside the US, current account balances would deteriorate in the short term as export competitiveness became compromised. This would eventually lead to a reduction of growth in the world economy, and, together with lower prices of imports from the US, would risk a destabilising fall

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