Economics
Emerging-Market Hot Money Risks Best Rally Since 2009
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The longest emerging-market currency rally in five years is faltering on speculation rising foreign ownership of local debt will leave nations from Indonesia to Brazil vulnerable to capital flight.
Overseas holdings of domestic bonds in 12 countries have climbed to about 26 percent of outstanding debt, from 25 percent in February and close to the record 27 percent in May 2013 that preceded a foreign-exchange selloff, according to Goldman Sachs Group Inc. All but four of 23 developing-nation currencies will weaken by year-end, led by Argentina’s peso and the Brazilian real, analysts surveyed by Bloomberg predict.