At a basic level, accounting for the external factors influencing emerging market (EM) economies used to be a relatively straightforward task. If you kept an eye on Fed policy, U.S. dollar trends and the International Monetary Fund (IMF), you could go quite a long way in understanding the most important external variables for these economies. That is no longer the case.
For a long time, EM investors have been only too aware that higher U.S. interest rates and a stronger U.S. dollar are typically bad news for EM debt investors because they imply tightening global liquidity and increased external debt servicing burdens in local currency terms.
Of the external factors impacting EM economies, geopolitics has been relatively calm for the last couple of decades and less important. That is changing and it requires a different skill set from investors. READ MORE
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