If it was Janet Yellen's intention when deciding not to hike rates to stop the surge of the USD against emerging market currencies in hopes of halting the relentless global capital outflows and the resulting Quantitative Tightning, to avoid a new global currency crisis... she failed.
As of this moment, at least four EM currencies had crashed to record lows against the dollar:
- the Brazilian Real
- the Turkish Lira
- the Mexican Peso
- the South African Rand
Expect many more to follow.
Here is the carnage for the key pairs:
And the heatmap for today:
And over the past 52 weeks:
The biggest embarrassment for the Fed: the global FX carnage is only accelerating and the USD is surging since Yellen "chickened out"