{
  "id": 8823593,
  "title": "BRICS Currency Markets Can Transmit Volatility To US Dollar, Reveals IIM Indore Study",
  "url": "https://urgent.news/2026/09/21/brics-currency-markets-can-transmit-volatility-to-us-dollar-reveals",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-09-21T02:30:00.000Z",
  "source": {
    "name": "Free Press Journal",
    "slug": "free-press-journal",
    "url": "https://www.freepressjournal.in/topnews/brics-currency-markets-can-transmit-volatility-to-us-dollar-reveals-iim-indore-study"
  },
  "original_language": "en",
  "account": "An IIM Indore study reveals that volatility in emerging-market currencies, such as those in BRICS nations, can reverberate back to the US dollar, challenging the traditional belief that the dollar drives such fluctuations. Prof Kiran Kumar Kotha and Sainandan Kandikattu, researchers from IIM Indore, investigated this phenomenon using daily foreign exchange data from January 1, 2004, to December 31, 2024. They discovered a reverse spillover effect, where investor behavior in BRICS currency markets can transmit volatility to the US dollar, rather than the other way around. The study defines anti-herding behavior as when investors diverge from the market consensus and base their decisions more on private signals. The researchers found that heightened global financial stress often increases anti-herding in BRICS markets, as opposed to herding behavior typically seen in equity markets during periods of fear. The study utilized the Cross-Sectional Absolute Deviation (CSAD) methodology to measure herding behavior and the US Office of Financial Research's Financial Stress Index (FSI) to gauge global investor fear. Wavelet Coherence Analysis was employed to analyze relationships across different investment horizons, while a Stochastic Volatility GARCH model assessed currency-market volatility. The findings indicate that short- and medium-term spillovers are linked to major periods of global financial stress, including the 2008 crisis, the Covid pandemic, and the Russia-Ukraine war. However, long-term spillovers persisted beyond individual crises, suggesting a structural component in the global dollar cycle. Among BRICS currencies, the Chinese renminbi (CNY) had the strongest overall impact on dollar volatility. The study provides a behavioral perspective on global financial contagion, suggesting that instability in the world's reserve currency may be influenced by investor behavior in emerging markets. These insights could help policymakers and market participants incorporate indicators of investor behavior in emerging-market currencies into macroprudential monitoring and stress-testing frameworks.",
  "summary": "Indore (Madhya Pradesh): A study by researchers at the Indian Institute of Management Indore has challenged the conventional view that volatility in emerging-market currencies is largely driven by the US dollar, finding instead that investor behaviour in BRICS currency markets can transmit volatility back to the dollar. The study, titled Investor Fear, Behavioural Contagion, and the Global Dollar…",
  "key_points": [
    "Volatility in BRICS currencies can impact US dollar, contrary to traditional belief",
    "Study finds reverse spillover effect from BRICS to US dollar during global financial stress",
    "Chinese renminbi (CNY) has strongest impact on dollar volatility among BRICS currencies"
  ],
  "editors_take": "The study's finding of a reverse spillover effect from BRICS currency markets to the US dollar challenges the traditional view of the dollar's dominance in global financial fluctuations.",
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}