Capital outflows from EMs have picked up again over the past few weeks amid a strengthening of the US dollar and broad increases in bond yields, but also country-specific issues – most notable declining optimism about the outlook for India’s economy and financial markets. It’s hard to see a significant turnaround given that Donald Trump’s likely policies will result in further dollar strength. Most EMs are well placed to face this, but some (e.g. Argentina and Turkey) could be at risk of sharp currency depreciations.
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