Middle East tensions are driving volatility in EM local debt, primarily through higher energy prices and shifting risk sentiment.
Foreign exchange (FX) has borne the brunt of the move, with currencies reacting more sharply than local rates.
The shock is increasing dispersion, with energy exporters benefiting while importers face growing pressure.
Dilok Klaisataporn/iStock via Getty Images
Rising geopolitical tensions in the Middle East have added volatility to emerging markets (EM) local currency debt, with energy price shocks and shifting risk sentiment driving dispersion across rates and FX. This backdrop reinforces the importance of selective, country-level
