Earlier this year Steve Forbes co-authored a book called Money: How the Destruction of the Dollar Threatens the Global Economy – and What We Can Do About It . Prominent on the cover is the image of a battered one dollar bill with a savage tear that threatens to consume the portrait of George Washington at its centre. Looking towards 2015, the prospect of a US dollar in terminal decline seems unlikely. The dollar has strengthened against most major currencies this year. Within six months it could easily trade higher against the euro and rise to its strongest versus the yen since December 2007. Behind this call is an expectation that the US will recover faster than other major economies, allowing the Federal Reserve to raise interest rates in mid-2015. This would be the first increase since 2006 and mark the “normalisation” of US monetary policy following the end of quantitative easing – the controversial financial stimulus programme designed to support shaky markets after the global financial crisis. The European Central Bank meanwhile is contemplating further stimulus that will weaken the euro, while a weak yen forms a central component of Japanese Prime Minister Shinzo Abe’s economic policies. With US assets in favour, the received wisdom is that international investors will pull money from investments in emerging markets, much as they did in last year’s infamous “taper tantrum” after former Fed chairman Ben Bernanke raised the prospect of an end to stimulus policies. There is good reason to believe that Asian markets will prove resilient this time Uncertainty over the exact timing of the shift in US monetary policy and questions surrounding the strength of the global recovery have already triggered the return of market volatility after a prolonged period of calm. There is good reason to believe that Asian markets will prove resilient this time. One of the most important consequences of last year’s tantrum was that emerging markets underwent an adjustment process. Current account deficits – largely driven by the degree to which imports exceed exports – are now smaller, or at least no bigger; real interest rates are turning positive; and real exchange rates have depreciated, helping curb imports and manage deficits. For example, India’s stocks and currency have recovered from sharp falls last year. Granted, much of this has been due to election euphoria on hopes Narendra Modi, the new pro-business prime minister, will champion much-needed reforms. However, the country has also made significant strides in addressing those signs of economic weakness that had been behind investor concerns. Indonesia, another of the so-called “fragile five” emerging economies most affected by last year’s tantrum, has also managed to restore monetary policy credibility but still faces headwinds. While sentiment has improved, Joko Widodo, the country’s new president, must tackle political resistance to his reform agenda. Higher interest rates and a stronger dollar may mark the end of the benign investment environment that has been a hallmark of much of the post-financial crisis era. However, it would be wrong to conclude that a stronger dollar is automatically bad for emerging market stocks. A look at the relationship between emerging market equity performance relative to developed markets and the strength of the US dollar over the past quarter century shows long periods – in 1993, 1999, 2005, 2010 – when emerging markets outperformed despite dollar strength. The normalisation of monetary policy is based on the assumption of a sustainable US economic recovery which bodes well for Asian export growth. Long-term benefits outweigh the inevitable short-term pain of adjustment to the changing policy environment. Due to the central bank policies of Hong Kong and Singapore, low US interest rates have been mirrored in both markets, encouraging speculation that helped create two of the most expensive property markets in the world. Interest rates at “normal” levels should lead to more productive investments. The end of financial stimulus policies isn’t a bad thing. They have made a mockery of traditional methods of gauging value and risk. Their demise will drain markets of speculative capital and signal a return to investment fundamentals and the search for quality. Markets will be better off in the long run. Flavia Cheong is investment director, equities (Asia), at Aberdeen Asset Management