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This Part of Emerging Debt Looks Good to Funds as Rates Rise

  • U.S. dollar’s decline has given shine to local-currency bonds
  • Aberdeen Standard, BNP Paribas Asset Management among fans
Inside The Jakarta Stock Exchange As Widodo Reaches For Indonesia Reboot On Mounting Currency Pressure
Photographer: Dimas Ardian/Bloomberg
Updated on

Interested in emerging-market debt but wary about rising bond yields as the Federal Reserve keeps raising interest rates? Then it might be worth looking at what used to be a riskier option -- local-currency bonds.

Historically low inflation rates in countries from Indonesia to Brazil mean, as a group, developing nations aren’t facing the pressure they sometimes had during U.S. monetary tightening cycles. And with the U.S. dollar depreciating even as the Fed hikes, local-currency debt has some insulation from worries such as supply hitting the Treasuries market.