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EM Financial Risk Monitor (Apr. 2024)

Higher US bond yields and a stronger dollar have put some EM currencies under pressure this year, but external vulnerabilities have eased in most EMs which should limit adverse spillovers. Indeed, our EM aggregate currency crisis risk indicator hit a new multi-year low in Q1. Currency risks remain concentrated in those EMs with the weakest balance sheets, including Argentina and Turkey.

Meanwhile, EM sovereign dollar bond spreads have narrowed this year, although in some cases this appears to have gone too far. Our sovereign risk indicators suggest that debt risks remained high across frontier markets in Q1 and that fiscal risks have risen sharply across Latin America.

To explore the EM financial risk indicators for Q1 in more detail please visit our interactive dashboard here.

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