The impact of US monetary policy tightening.
Following the US Federal Reserve's (Fed) historic decision to raise rates for the first time since 2006, the start of the Fed's monetary tightening cycle is accentuating the hawkish stance of Latin America's main central banks. This comes amid a dramatic sell-off in commodity markets, persistent concerns about China's economy and a severe deterioration in economic conditions across the region.
EM asset prices have remained relatively resilient to the rise in US interest rates, in stark contrast to the 'taper tantrum' in 2013.
Hitherto-resilient regional local currency government bond markets will face foreign capital outflows due to falling commodity prices.
The Brazilian real is 2015's worst-performing major EM currency, but due largely to political and economic difficulties at home.
