ABSTRACT
India, as a major Asian economy with open financial markets, attracts global investment but remains vulnerable to U.S. uncertainty shocks. Such shocks depress stock prices and output, depreciate exchange rates, raise spreads, and trigger capital outflows in emerging markets, while also affecting consumer prices and trade flows. The impact on South America is weaker for output and stock prices but stronger for capital and trade. As the dominant currency in cross-border trade, U.S. dollar volatility significantly influences EXIM, MNCs, FDIs, and global markets. This paper investigates return and volatility spillovers of dollar fluctuations on global economies and financial systems.
