An increase in external debt has raised concerns that the emerging world faces a rough ride over the coming years as the dollar strengthens. However, our updated Capital Economic Risk Indicator (CERI) suggests that a strong dollar is unlikely to trigger a systemic emerging market (EM) crisis. Risks stemming from external debt are most acute in Venezuela and Turkey. But, in general, EMs have sufficient foreign exchange reserves to cover their short-term external liabilities.
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