WHEN economic historians look back on the years following the global financial crisis, they might ponder the exact moment at which the boom in offshore dollar-lending reached its zenith. Was it September 2012, when Zambia issued its debut Eurobond (dollar-denominated bond), at a yield of 5.4%, and received $12bn of orders? Perhaps it was a year later, when investors gobbled up an $850m Eurobond issue by a state-backed tuna-fishing venture in Mozambique. In between Petrobras, Brazil’s state oil company, was able to issue $11bn of ten-year bonds in May 2013, a record for an emerging-market firm, at a generously low yield of 4.35%.
Investors had reason to regret those purchases even before the dollar’s latest surge. Between November 9th, when Donald Trump won the presidential election in America, and the Thanksgiving holiday, the dollar rose by 3% against a basket of rich-world currencies. Such a jump in so short a time is rare. The dollar-borrowing binge during these years helps explain why the greenback bounced so sharply.
By the end of last year, governments and businesses outside America had racked up $9.7trn of debts denominated in…
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