A Review and Outlook on the Impact of the Federal Reserve’s Monetary Policy on the Depreciation of Emerging Market Currencies

Abstract

This article focuses on the study of the impact of the Federal Reserve’s monetary policy on the depreciation of currencies in emerging markets. By reviewing relevant literature, it systematically elaborates on the transmission channels, influencing factors, strategies adopted by emerging markets in response, and future research directions. The research shows that the Federal Reserve’s monetary policy affects the exchange rates of currencies in emerging markets through channels such as capital flows, exchange rate expectations, economic fundamentals, and policy space constraints, and the degree of impact varies among different emerging markets. Emerging markets can cope with the pressure of currency depreciation by optimizing economic structure and strengthening policy coordination. Future research can pay more attention to the changes of global financial structure, the differences within emerging markets and policy innovation.