Dollar Seen as Shutdown Loser

Emerging-market currencies get a boost on hopes the hit to growth will delay Fed taper.

The first U.S. government shutdown in 17 years is stoking speculation that the longer it lasts, the more likely the Federal Reserve will delay reducing its monetary stimulus program, boosting emerging-market currencies at the expense of the dollar.

At least $300 million a day in economic output will initially be lost because lawmakers can’t agree on a budget, according to IHS Inc. A two-week shutdown starting Oct. 1 could cut growth by 0.3 percentage point to a 2.3 percent rate, according to St. Louis-based Macroeconomic Advisers LLC.

Buying Opportunity

Currencies whose fortunes are linked to the commodities market such as the Australian dollar appreciated yesterday, as did the Colombian peso, Hungarian forint and Russian ruble. The Bloomberg JPMorgan Asia Dollar Index climbed 0.2 percent for its biggest gain since Sept. 23.

Shutdown History

The U.S. government was partially closed yesterday with Congress deadlocked over whether to tie any changes to the 2010 health-care bill to an extension of government funding. Even if the budget fight is resolved, lawmakers would immediately move to the next fiscal dispute over raising the debt ceiling.

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