Lilian Karunungan notes:
“In the mid-1990s,
U.S. interest-rate increases helped spark a Mexican peso devaluation that
fueled capital flight and caused the so-called Tequila crisis. Within a few
years, the sell-off had spread to Asia, which became the center stage of the
emerging-market crisis, during which currencies were devalued as the region was
sent into an economic tailspin. Fast forward to 2018, and history is repeating
itself, with a crisis brewing in Latin America as Argentina seeks emergency
funding just as the dollar and U.S. bond yields spike.
But this time around,
Asia is less vulnerable to contagion, says Macquarie Bank Ltd.’s Nizam Idris.”
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