Ahead of the stock market's opening plunge, CNBC's Jim Cramer warned on Tuesday about the dangers of the rising dollar on emerging markets.
"If you look internationally, there's havoc, and the havoc is that the dollar is moving so aggressively that it is going to cause, not turmoil, but actual wreckage, in a lot of funds that have money in some of these emerging markets. I think the logical place to look is Brazil." Cramer said on "Squawk on the Street."
Cramer made his remarks as the dollar index hit new mutliyear highs against a basket of currencies. The dollar was also up nearly 0.5 percent against the Brazilian real on Tuesday, while the euro fell below $1.08 for the first time in about 12 years.
"There's a lot of debt issued [in Latin America]," Cramer said. "[Mutual funds] have been buying these bonds because they wanted yield. Suddenly, the money's coming out of them. We saw this in 1997 and 1998. I'm not saying it's going to be that bad, but understand there is a contingent among companies that have issued a lot of bonds [in Latin America]."
Cramer also said these recent currency headwinds are happening fast, making it harder for investors to react. "No one can move this fast. When you see these kinds of moves, people are out of position and they're frantically trying to get short anything, and that's how you get this kind of sale."
U.S. stocks fell sharply at the opening of trading Tuesday. ()