The US dollar’s strengthening last year to a 20-year high had major implications for the global economy. We examine these spillovers from the currency’s appreciation in our latest External Sector Report. Building on recent research by Maurice Obstfeld and Haonan Zhou, we find that negative spillovers from US dollar appreciations fall disproportionately on emerging market economies when compared with smaller advanced economies. In emerging market economies, a 10 percent US dollar appreciation, linked to global financial market forces, decreases economic output by 1.9 percent after one year, and this drag lingers for ... (full story)