Developing Disaster

Several developing markets including Argentina, Indonesia, and Turkey, are getting whacked! While each is unique, these developing nations generally suffer from high externally denominated public and corporate indebtedness, large deficits, and high inflation. What lit the fuse is the greenback’s recent unexpected strengthening, which has caused money to pour out of these nations chasing higher US returns. This has weakened their currencies and exacerbated their preexisting fiscal and monetary problems.