Emerging Markets Flashcards
1
Q
Is the bottoming in the USD good or bad for EM?
A
Bad because a rising dollar tends to see K flow back to the US diverting K away from EM which is deflationary for EM
2
Q
How does holding USD debt impact EM?
A
EM has a lot of USD debt and when the dollar goes up, external liabilities go up as well. Stronger dollar implicitly means devaluation of the local currency which makes it harder to pay back the USD debt.
