The Debts of the Lenders: Emerging Markets Behind The Dollar's Rally

Emerging markets grew on leverage too. Unfortunately for them, they took on debt denominated in dollars, swiss francs, or yen.

So, what does that mean now? They have to spend dollars to defend against a run on their own domestic currencies! Countries like China, Russia, and the Gulf states w/big dollar hoards and strict capital controls don't have to worry that much.

BUT countries w/o dollar reserves and loose controls are on a Treasury spending spree. Countries like Argentina, Turkey, Hungary, ...actually all of Eastern Europe are some of the big culprits behind the dollar's strength.