A victory for Donald Trump in the US election would probably result in higher US Treasury yields and a stronger dollar. That’s an environment in which central banks in EMs with strained balance sheets (notably Turkey) could hike rates and others that are particularly sensitive to US developments, such as Indonesia and Mexico, would turn more hawkish. There’s also a broader group of EMs in Central Europe and Latin America where inflation is already running hot and a stronger dollar could make policymakers more reluctant to loosen monetary conditions. In much of Asia, where inflation is low and external vulnerabilities small, there would be a smaller impact on central banks’ thinking.
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