The close correlation between share prices in the United States and emerging exchange rates

Since 2013, international capital flows have been oscillating between the United States and emerging countries. When capital flows to the United States, it is primarily to buy US equities, and share prices rise rapidly in the United States, while, since this capital flows out of emerging countries, their exchange rates depreciate. Conversely, when capital flows from the United States to emerging countries, the in US equity market falls and emerging currencies appreciate. Emerging currencies are therefore an efficient hedge against a decline in the US equity market.