The weakening of the US dollar triggers a reversal in capital flows: emerging markets are becoming the target of large-scale "silent migration"

LiquiditySurfer · 2026-01-23T09:20:11+00:00

The weakening of the US dollar is driving global capital flows into emerging markets, with stocks, currencies, and precious metals rising, and the MSCI Emerging Markets Index strengthening. Investors are divesting from US Treasuries and diversifying into higher-yielding emerging markets, reflecting a reassessment of traditional safe-haven assets.

LiquiditySurfer

2026-01-23 09:20:11

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[Crypto World] The weakening of the US dollar is driving a major reallocation of global capital. Recent data shows that emerging market stocks, currencies, and precious metals continue their upward momentum since the beginning of the year, with investors rushing into emerging market funds at an unprecedented pace, pushing up the MSCI Emerging Markets Index, and Asian currencies collectively strengthening.

The driving forces behind this rally are quite solid: global economic growth remains resilient, the AI spending boom continues to generate growth momentum, along with the improved political landscape in Latin America and the soundness of emerging markets’ fiscal and monetary policies.

Katie Koch, CEO of TCW Group, pointed out an interesting phenomenon—investors are quietly withdrawing funds from US Treasuries and diversifying into other assets. She describes this move as a “silent resignation” from US bonds. This metaphor is quite vivid, reflecting that under the pressure on the dollar, large capital is re-evaluating the allocation of traditional safe-haven assets. In other words, money is flowing into emerging markets with better yields and more controllable risks.

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CryptoCrazyGF

· 01-25 02:09

When the US dollar softens, you have to run, I understand this logic. However, Katie Koch's statement about "silent resignation" is indeed brilliant, but what I care more about is—after this round of capital migration to emerging markets, will it suddenly turn around like before? The idea of Asian currencies strengthening sounds appealing, but if the Federal Reserve suddenly adopts a hawkish stance, it could reverse at any moment. Whether the "steady policies" of emerging markets are reliable remains to be seen, after all, we've seen too many plot twists. The AI boom seems promising for this sector, but how long can political stabilization in Latin America last? That's what I really want to know.

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EyeOfTheTokenStorm

· 01-24 12:26

The capital flow under the weak US dollar indeed warrants attention, but I have to say, this recent surge in emerging markets might not be that simple. From a quantitative perspective, the recent increase in the MSCI Emerging Markets Index implicitly signals several risks—financing leverage ratios have hit new highs, which is often a precursor to a top. Katie Koch's mention of "quiet quitting" sounds appealing, but in reality, it's large funds selling off at high prices while retail investors continue to chase gains. Don't be fooled by the hype around AI and economic resilience; historical data repeatedly shows that such reversals in flow are most likely to become traps. It is recommended to observe the technical support levels of Asian currencies; once broken, it signals danger.

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DeFiVeteran

· 01-23 09:49

The depreciation of the US dollar is indeed accelerating capital reallocation, but I think the so-called "silent resignation" is a bit of an overinterpretation. US Treasury yields are still so high, and what institutions truly care about is the actual return rate. Emerging markets are indeed on the rise, but risk premiums are also increasing, especially exchange rate risk. How long the Asian currencies can stay strong in this round depends on the Federal Reserve's subsequent stance. From a DeFi perspective, cross-chain capital flows are reconfiguring, but on-chain data on real emerging market exposure is not yet transparent enough and warrants attention.

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Blockblind

· 01-23 09:45

The recent depreciation of the US dollar indeed presents an opportunity for a reshuffle, but it's important to see clearly who is truly benefiting. Emerging markets are gaining popularity, but the problem is that retail investors often enter when institutions are already retreating. The term "silent resignation" sounds impressive, but in reality, it's large capital shifting risk. We need to be alert to the potential liquidity trap behind this. How long the AI-driven growth story can hold remains uncertain.

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MetaverseVagabond

· 01-23 09:33

The depreciation of the US dollar is indeed reshaping global capital flows, but I think the duration of this "silent migration" still remains uncertain. Although emerging markets offer stable policies and attractive returns, geopolitical risks and exchange rate fluctuations can at any time reverse investor sentiment. Katie Koch's analogy is quite vivid, but the problem is that once the Federal Reserve's policy shifts, this "resignation" could instantly turn into an "escape." The strengthening of Asian currencies is worth paying attention to, but relying solely on the weakness of the US dollar is somewhat fragile; it still depends on whether the actual economic fundamentals can keep up.

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ImpermanentPhobia

· 01-23 09:31

After the US dollar softens, we do see funds flowing, but it seems that the recent rally in emerging markets is more driven by AI expectations, and the gains in precious metals are not that exaggerated. Katie Koch's term "quiet quitting" sounds sophisticated, but in reality, it just means reducing holdings in government bonds, and the key depends on how the Federal Reserve moves. The current issue is that emerging markets have limited policy space, and once the dollar rebounds, will it be a quick in and out?

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