TheStreet’s Jim Cramer says a rate hike now could crush the currencies of Mexico, Brazil, Turkey, South Africa, and so on. Why do these matter? Because this is the stuff of contagion, Cramer says. These countries that are in trouble can’t be isolated because they’re all linked together by these gigantic mutual funds that reach for yield, American mutual funds that bought emerging market debt in order to pick up a little extra — and that’s the Achilles Heel of this whole market, he says. If the Fed raises rates, those mutual funds would see big redemptions. That flow of funds could be disastrous, Cramer says, and that’s why it’s important that the Fed does nothing for the foreseeable future even if the economy is strong here.
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