The combination of trade tensions, U.S. rate hikes and weaker global trade growth has weighed on emerging markets (EM) this year. EM countries remain condition-takers and are often susceptible to external factors, such as moves in the U.S. dollar. Most EM currencies have moved broadly in line with what would be expected given the dollar’s appreciation this year. However, outlier countries like Argentina and Turkey, which are more vulnerable to external factors due to their heavy reliance on dollar-denominated short-term financing, have reacted more strongly to dollar strength. Based on an assessment of financing ... (full story)