The effects of foreign investors' holdings on the local currency sovereign bond markets in Latin America

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Baumann Fonay, Iván
May 2022
Since the turn of the century, emerging market economies have begun to develop markets for bonds denominated in their local currencies, thus trying to avoid the “original sin” that resulted in many previous crises. This paper tries to determine the impact of foreign investment in these markets for seven Latin American economies. It finds that foreign investment can be either a blessing or a curse, depending on depreciation expectations.