feb 4 reuters  poorer emerging market countries are facing the headwind of rising global interest rates this year which in the past has prompted international investors and their capital to up anchor and sail out the issue is that when big developed economies like the united states jack up rates the returns on investments like government and corporate bonds and higher interest rates offered by developing countries no longer look quite so worth the extra risk and financial markets now expect us interest rates  which tend to drive em borrowing costs  to go up 5 times this year and some wall street analysts are even predicting seven the last time that happened within such a short window was august 2005 to june 2006 the 10year treasury yield is now at 185 from just over 15 at the start of the year which has pushed up em rates the average cost for an emerging market government to borrow in its own currency is now almost 6 jgegdcm read more the international monetary fund has made a point of warning developing economies to prepare for potential bouts of turbulence if us rates go up rapidly andor if the coronavirus pandemic worsens again it also says that those with strong inflation pressures or weak institutions should be ready to let their currencies drop and raise their own interest rates brazils real  colombias peso and in eastern europe the czech crown and hungarian forint  have all risen this year as their central banks have raised interest rates these charts show some of the other metrics which traditionally make a developing country vulnerable to rising global interest rates colombia chile and egypt have the biggest current account deficits as percentage of their gross domestic product gdp according to data from oxford economics which makes them more likely to borrow the money to pay for their imports colombia south africa and thailand have the biggest budget deficits meaning they have to borrow more to fill the gap qatar united arab emirates and hungary have higher levels of dollar and other hard currency debt making up more than 80 of their gdp borrowing in another countrys currency is described by economists as the original sin as a falling local currency can make it very expensive to pay back that debt very quickly argentina qatar and egypt are among the countries with the lowest stockpiles of foreign exchange reserves which can be used to bolster domestic currencies and pay for goods if needed sri lanka spends far more than it brings in in taxes and other revenues just paying the interest on its debt let alone the underlying amount ghana uses 44 of its revenues while egypt pakistan and kenya use 3040 in real effective exchange rate terms reer the brazilian real and colombian peso are currently trading at a more than 20 discount to their 10year averages according to bank of international settlements data in contrast the czech crowns reer is at a 10 premium reer is calculated on a tradeweighted basis against a basket of currencies and adjusted for inflation economists say that higher and lower reers are misalignments and both come with associated risks in the case of higher reers the risk could be economic overheating excess and unhedged borrowing and excess capital inflows analysts at dbs explain with lower reers the risk would include high imported inflation loss of purchasing power and external debt service difficulties reporting by gaurav dogra and patturaja murugaboopathy editing by marc jones and elaine hardcastle