The dollar's quiet rally is squeezing emerging-market borrowers again
A strong dollar is a global tax.
Elena VasquezSenior Markets Correspondent
Global city skyline at dusk
NEW YORK — The dollar has not needed a crisis to rise. It has needed a U.S. real-yield advantage and a world that still invoices in one currency. Emerging-market borrowers are feeling that combination as a refinancing tax.
Treasurers who swapped into dollars in 2021 to shave coupons are now staring at hedge costs that erase the original savings. Some will term out in local currency. Some will simply pay.
This is how a U.S. rates story becomes a Jakarta and São Paulo story without anyone in Washington intending it. Capital is global. The invoice is not.
Elena Vasquez
Senior Markets Correspondent
Covers Treasuries, the dollar, and the policy signals that reprice risk assets.