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A man looks at currency rates outside an exchange house in Buenos Aires January 31, 2014.
A man looks at currency rates outside an exchange house in Buenos Aires January 31, 2014.
(Stringer/Reuters)

If the Mexican peso fails, the loonie could be next

For emerging markets assets, the rout is on. The only question now is how far the damage will spread.

For investors, the Mexican peso represents a line in the sand. A failing peso puts the loonie and the Australian dollar firmly in global investors’ crosshairs.

The currency-related carnage has so far been focused on countries with similar characteristics, namely slow growth, inflation and large current account deficits.