Dollar Surge and Disappointing China Stimulus Weigh on Asian Markets

The US dollar's recent surge has led to the largest decline in emerging market (EM) currencies in two years, with a JPMorgan index showing a 5% drop over the past two and a half months. This decline is driven by expectations of US trade tariffs and fiscal policy changes under President-elect Donald Trump, affecting currencies like the Mexican peso and China's renminbi. The sell-off has also impacted carry trades and is compounded by country-specific issues in nations like China and Brazil. Analysts note a lack of positive economic stories in EMs, contributing to the trend.