ETMarkets Smart Talk | Higher US rates could accelerate capital flight from EMs, but India remains better - The Economic Times
ETMarkets Smart Talk | Higher US rates could accelerate capital flight from EMs, but India remains better - The Economic Times
Source: The Economic Times
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DW NOTE
The Fed's September rate hike to 3.75%-4.00% — its first since 2023 — comes with the 10-year Treasury at 4.94% and the dollar claiming 57.13% of global reserves. India's advantage isn't that it's immune to capital flight at these yields; it's that its current account deficit is 1.2% of GDP while Turkey's is 4.8% and Brazil's commodity dependence makes it a derivative of Chinese demand. When the cost of dollar funding rises, the countries that get hit first are the ones that need to roll over the most debt in the hardest currency.