Coronavirus Triggers Dollar Drain in Big Emerging Markets
By Kohei Onishi, Kazuya Manabe, Mio Tomita
The global coronavirus pandemic threatens to send capital fleeing from emerging economies, as falling exports and a dearth of tourists cause foreign reserves to dry up. Meanwhile, weaker local currencies make servicing external debts harder.
This confluence of negative factors has financial markets watching closely to see if once fast-growing economies can weather a prolonged downturn.
Emerging economies are earning much less foreign currency this year. According to the International Monetary Fund, the average current account deficit of 141 emerging economies, excluding China, is expected to be 2% of gross domestic product.
Photo courtesy of byronv2.