Dollar and Emerging Equities: Negative Correlation Holds Firm
The relationship between the US dollar and emerging equity markets follows a simple logic: when the dollar appreciates, emerging assets tend to suffer—their currencies weaken, dollar-denominated debt becomes more expensive to service, and capital flows shift toward the United States. When the dollar declines, the opposite occurs. Ten years of historical data confirm this relationship, but with a degree of variability and some exceptions worth understanding.
By calculating the correlation between the daily returns of the Dollar Index and EEM—the primary ETF tracking global emerging equity markets—the inverse relationship is evident but not constant.
Over the full ten-year period, the correlation stands at -0.30: moderate, not structural.
🔒 Subscriber-only content. Activate 14-day free trial or Login here
