One of the side effects of the developing Eurozone crisis is a rising USD spreading the crisis to emerging market (EM) via capital flight that causes steep monetary tightening. Making this worse is that the Chinese yuan has stated falling too which will spook markets about falling EM competitiveness.
Tom Orlik at Bloomberg today looks at where the crisis goes next, via Zero Hedge:
The results show that while Turkey is the worst of the bunch; Argentina, Colombia, Mexico and South Africa are also underperforming.
The full text of this article is available to MacroBusiness subscribers
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
