With the Federal Reserve raising rates for the first time in nine years, higher borrowing costs might spark a credit crunch in Asia and hurt growth, analysts said.
Dollar credit to non-banks outside the U.S. came in at $9.8 trillion at the end of the second quarter, with around $3.3 trillion of that lent to emerging market economies, according to the Bank for International Settlements (BIS). In some major emerging markets, the dollar debt of non-bank borrowers doubled from the first quarter of 2009 through the second quarter of 2015, the BIS said.
"Since high overall dollar debt can leave borrowers vulnerable to rising dollar yields and dollar appreciation, dollar debt aggregates bear watching," the BIS said in a report published earlier this month.
The dollar has already appreciated quite a bit against many emerging market currencies and the Federal Reserve's interest rate hike Wednesday is widely expected to strengthen the greenback even further. The Fed raised its target federal funds rate to a range of 0.25 to 0.5 percent on Wednesday, marking its first rate increase since June 29, 2006.