Hedge fund borrowing exposes emerging markets to greater Iran war risk, says IMF

Analysis shows developing economies more likely to experience higher interest rates and currency shocks

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Emerging economies are at greater risk of higher interest rates and currency shocks resulting from the Iran war because of increased reliance on market investors such as hedge funds, the International Monetary Fund has warned.

The IMF’s analysis shows that a cumulative $4tn flowed into emerging markets last year from outside the formal banking sector – including from hedge funds and investment funds.