The level of threat varies considerably, with the most danger for markets like Thailand, where the central bank has kept rates at a record low. South Korea and New Zealand, which moved early to front load hikes, are better placed but not immune to trouble.
The expected 75-basis-point interest rate increase from the Federal Reserve this week will heap pressure on its Asian counterparts to speed up monetary tightening – or risk further fund outflows and weaker currencies.
An analysis of policy rates in Asia Pacific versus their five-year averages shows a high degree of vulnerability across the region, as does an examination of interest rates adjusted for inflation, and yield spreads versus US Treasuries.
