Korea’s central bank said it sees the prospect of rising interest rates in the US as a threat to economic stability in emerging economies and will increase its monitoring of such risks.
Rate increases and a strong dollar have driven up volatility and capital outflows in emerging markets, adding to uncertainties related to the trade dispute between the US and China, the Bank of Korea said in a report released Sunday. A stronger dollar increases the costs for servicing dollar-denominated debt.
Argentina, Turkey, Brazil and South Africa are more vulnerable because of their risk-sensitive currencies and volatile credit default swap premiums, according to the report. Mexico and Southeast Asian nations including Thailand, the Philippines and Vietnam are relatively stable, the central bank said.
