Thus, a negative surprise bedeviled many EMEs when it became public that important large corporations, mainly in Mexico, Brazil, and South Korea, were being hit with large losses from derivative products. The lack of information about the identity of the firms involved, as well as the magnitude of the losses, increased risk aversion.
When fundamentals moved to justify sharp depreciations of exchange rates, the adjustments were exacerbated by these financial structures. The depreciations resulted in significant losses from the derivate positions for non-financial firms. In order to post collateral against these losses, firms had to demand more dollars.