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Is the Fed causing turmoil in emerging markets?

Aug 31, 2018
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Chris McGrath/Getty Images

Is the Fed causing turmoil in emerging markets?

Aug 31, 2018
Chris McGrath/Getty Images
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COPY

It’s been a bad week for emerging market economies. The Turkish lira continues to lose ground against the dollar while the Argentine peso fares even worse, so much so that Argentina’s central bank raised its interest rates to 60 percent. Yes, six-zero. Domestic problems in the two countries have not been helped by the United States. Higher interest rates set by the Federal Reserve make it harder for emerging market economies to hold on to foreign investment and repay their dollar-denominated debts. 

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