Surging USD a sign of market pessimism, but isn’t necessarily a challenge for companies

AFTER a first-half fear fest, investors have moved on to the next concern: a surging US dollar (USD), which many fear will spark an Asian market exodus.

The greenback is up 8.4 per cent this year against a trade-weighted global currency basket, and 15.5 per cent since last June. It sits near multi-decade highs versus the euro, Japan’s yen and Britain’s pound. Even multiple tightenings by the Monetary Authority of Singapore haven’t stopped the Singapore dollar from sinking 2.9 per cent versus the USD this year.

But don’t fret. Dollar doldrums are less about economics and more about pulverised sentiment, which is a counterintuitively bullish sign for 2022’s remainder.