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The Bank for International Settlements estimates that offshore US dollar debt has exploded to US $11.8 billion, with a further US$14 trillion of “equivalent” liabilities hidden in derivatives. This volume is unprecedented.

The IIF suggested that the current situation may be more dangerous than the “taper tantrum” in 2013 when the “fragile five” emerging markets — then India, Brazil, Turkey, South Africa and Indonesia — were forced to take drastic action to defend their currencies.

“Even though the underlying shock this time is smaller — the rise in long-term yields this year is roughly half that in mid-2013 — many emerging market currencies have weakened as much as or more than in 2013, a sign to us that vulnerability to rising global rates is high,” said Brooks.

Alastair Wilson, director of global ratings at Moody’s, said worries are rising as a string of states fail to get a grip on leverage. “Debt remains extremely high by historic standards. Significant ‘event risks’ are looming in the background,” he said. Moody’s said capital outflows from Asia over the last month have already been roughly half the pace of the taper tantrum, with the frontier markets most exposed. Mongolia must roll over its entire debt stock (80 per cent of GDP) within three years. The agency has already downgraded 20 sub-Saharan countries in Africa, compared to just two upgrades.

Mauro Leos, Latin America chief at Moody’s, said Argentina was first in the firing line because of its unsustainable “twin deficits,” with the current account gap ballooning to 5 per cent of GDP. Foreign direct investment covers only a third of this funding need. The rest has to come from capital inflows. Foreign exchange reserves were too thin to ride out the storm.