This dollar chart is bad news for emerging markets

If history is any guide, emerging markets are headed for trouble as the dollar strengthens.

A soaring U.S. currency coupled with higher interest rates and lower commodity prices, triggered debt defaults in Latin America back in the 1980s. A decade later, the dollar's appreciation forced Asian countries from Thailand to Malaysia to drop their peg to the greenback and threw the region into a crisis.

As in the past, a strong dollar and the prospect for higher borrowing costs in the U.S. are now lowering commodity prices, reducing exports from countries such as Brazil, South Africa and Russia. It is also luring capital away from developing nations, slowing their credit expansion and dragging down economic growth, according to Julian Brigden, managing partner of research firm Macro Intelligence 2 Partners.

"The symptoms of an emerging-market crisis are numerous, but the cause is always a rising dollar," Brigden said in a July 22 report. "In Asia, especially China, adherence to the dollar risks a credit crunch and slower growth. For commodity producers, falling demand and prices suggest the pain is just starting.'"

Just how far could the dollar rise?

A Federal Reserve gauge of the inflation-adjusted dollar exchange rate against major U.S. trading partners shows the greenback has so far gained 17 percent from an all-time low in July 2011. In the previous two dollar-rising cycles, the currency gained 53 percent between 1978 and 1985, and then 34 percent in the seven years through 2002.