This combination resulted in a seriously overvalued dollar, which for many analysts is the primary cause that sunk a large number of Latin American economies into a decade of stagnation. Underlying vulnerabilities remain for some large emerging markets still today.
High corporate debt, weak balance sheets and thin policy buffers mean that these economies are exposed to tighter global financial conditions and capital flow reversals. A closer look at the numbers may provide some reason to be slightly apprehensive: today we are experiencing a stronger dollar than in the strong dollar period of the eighties.