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Data: Institute of International Finance; Note: Values not adjusted for inflation; Chart: Harry Stevens/Axios

The continued strength of the dollar has been a headwind for U.S. businesses and it may begin to put a major strain on economies outside of the United States.

Where it stands: The share of debt issued by emerging market countries in dollars rose to an all-time high in the first quarter, data from the Institute of International Finance shows. If the currency trend doesn't change soon, countries already struggling with weakness at home will find themselves in serious trouble when these bonds need to be repaid.

  • While risk assets from global stocks to high-yield "junk bonds" have delivered strong returns to investors so far this year, emerging market currencies, which typically rally in such an environment, have missed the party entirely.
  • MSCI's Emerging Markets Currency Index last week fell to its lowest level in more than 3 months while the dollar index rose to its highest since June 2017.

Why it matters: The weakness in EM currencies suggests the market is still worried about the global economy, despite strong and steady economic readings from the U.S. and improvement in China.

The big picture: EM's problem children, Argentina and Turkey, have seen their currencies fall by around 13% and 9% against the dollar so far this year, after record losses in 2018. Both are experiencing recessions and analysts worry that defaults in 1 or both countries are on the horizon.

  • The dollar's strength could become "a chronic source of macroeconomic instability," the IIF warns.

The bottom line: Emerging market economies now make up 60% of global growth. Their health is imperative for the world economy to continue moving forward, and the dollar's strength has been weighing on it.

Go deeper: The global economic whiplash between stocks and currency markets

Go deeper

GM's high-stakes electric move

The Cadillac Lyriq. Image courtesy of Cadillac

Cadillac on Thursday unveiled the Lyriq, the luxury brand's first all-electric model and GM's first consumer electric vehicle unveil since the Chevy Bolt several years ago.

Why it matters: It's the first reveal by GM of an electric vehicle that will use the company's new modular platform and Ultium battery system — technologies meant to underpin the 20 electric vehicles that GM plans to launch by 2023.

Trump's TikTok and WeChat actions ratchet up the pressure on China

Illustration: Aïda Amer/Axios

President Trump escalated his campaign to claw apart the Chinese and American tech worlds Thursday evening, issuing executive orders that threaten to ban both TikTok and massive global messaging app WeChat.

The big picture: Trump's orders come against a backdrop of heightening tension with China, the steady unfolding of a hard "decoupling" between the world's two largest economies, and the Trump campaign's effort to wave a "tough on China" banner.

Updated 36 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Eniola Odetunde/Axios

  1. Global: Total confirmed cases as of 9 a.m. ET: 19,128,901 — Total deaths: 715,555— Total recoveries — 11,591,028Map.
  2. U.S.: Total confirmed cases as of 9 a.m. ET: 4,884,406 — Total deaths: 160,111 — Total recoveries: 1,598,624 — Total tests: 59,652,675Map.
  3. Politics: Trump floats executive action even if stimulus deal is reached.
  4. Business: U.S. economy adds 1.8 million jobs in July — Household debt and credit delinquencies dropped in Q2.
  5. Sports: The pandemic's impact on how sports are played.
  6. 1 🎮 thing: Video gaming growth soars.