["Journal of Money, Credit and Banking, EarlyView. ", "\nAbstract\nThis paper shows that dollar appreciations reduce GDP, investment, and private credit in emerging market economies, and documents the relative contribution and dynamics of four transmission channels, finding that financial channels dominate trade channels. Higher dollar‐denominated credit generates persistent contractions, with GDP falling 0.3 and investment 0.5 percentage points in the medium term. Low monetary policy credibility amplifies the initial GDP contraction by 0.2–0.3 percentage points, but only in the short run. The traditional Mundell–Fleming trade channel is muted, as dominant currency pricing and global value chain integration weaken the link between exchange rates and trade flows."]