The emerging markets crisis is real now
More and more people are talking about the spillover of Fed policy into emerging markets as the crisis there gathers pace. I know the Fed Chairman Powell has said that EM is not his concern. Nevertheless, we are reaching a point where he may start to backtrack on those statements.
Here's the Wall Street Journal just yesterday:
The tumult highlights a heavy international dependence on the dollar. Some 48% of the world’s $30 trillion in cross-border loans are priced in the U.S. currency, up from 40% a decade ago. Exchange-rate fluctuations affect the ease of servicing that debt. And with U.S. interest rates still low by historical standards and the dollar only halfway back to its 2016 highs, the stress could increase as the Fed keeps tightening.
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.