This is the Cato Daily Podcast for Friday, October 16, 2015. I'm Caleb Brown.

What does a strong dollar and the expectation of higher interest rates mean for other

currencies and commodities and why haven't we seen hyper-inflation? Steve

Hanke directs the Cato Institute's Troubled Currencies Project. We discussed

recent events in world currencies this week.

Well, the first thing is that the dollar has gotten relatively strong compared to the euro.

The dollar euro exchange rate is the most important price in the world

and the dollar is strengthened. So that's one point.

And when the dollar strengthens against the euro,

since all commodities are priced and invoiced in dollars,

commodity prices tend to be weak. Dollar-strong commodity prices tend to be weak.

Dollar strong, commodity prices weak.

So that's one story.

The other story is that dollar strong emerging market currencies weak.

Some of them very, very weak.

There have been huge depreciation in many emerging market currencies and that is really been brought on by the

fact that expectations are that the Federal Reserve, the European The

European Central Bank and the Bank of Japan, as well as the Bank of Japan,

as well as the Bank of England, will ultimately be forced to increase interest rates and when they increase

interest rates the so-called Curie Trade will unwind.

It's unwinding now.

The Carry Trade explain.

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