That’s not all. Higher U.S. real rates are draining foreign capital away for leveraged emerging-market borrowers, sending currencies from the Turkish lira to Indian rupee to historic lows.
“Almost every EM currency weakens vs the dollar as U.S. yields rise,” wrote Mitul Kotecha, emerging-market strategist at TD Securities in a note. “Much going forward will depend on the message the Fed delivers this week, but it’s hard to call a top in nominal U.S. or real yields at present.”
--With assistance from Masaki Kondo.
This article was provided by Bloomberg News.