The dramatic events in Argentina may be the "tip of the iceberg" of a broader systemic crisis across Asia, Latin America and Africa, the top emerging market watchdog has warned.
The Institute of International Finance says powerful contractionary forces are coming to bear as the US Federal Reserve tightens monetary policy, draining dollar liquidity and lifting borrowing costs for much of the world economy.
"Rising global interest rates beg the question whether Argentina is an idiosyncratic case or a harbinger of things to come. We worry it might be the latter," said Robin Brooks, the IIF's chief economist.
What has raised alarm bells is the 5.5 per cent rise in the US dollar index (DXY) since mid-February, a delayed reaction as the Fed reverses quantitative easing and signals a series of staccato rate rises. A stronger dollar automatically squeezes the international financial system, often through complex hedging contracts that are poorly understood.
The Bank for International Settlements estimates that offshore US dollar debt has exploded to US$11.8 billion ($17.2b), with a further US$14 trillion of "equivalent" liabilities hidden in derivatives. This volume is unprecedented.
The IIF suggested that the current situation may be more dangerous than the "taper tantrum" in 2013 when the "fragile five" emerging markets - then India, Brazil, Turkey, South Africa and Indonesia - were forced to take drastic action to defend their currencies.
"Even though the underlying shock this time is smaller - the rise in long-term yields this year is roughly half that in mid-2013 - many emerging market currencies have weakened as much as or more than in 2013, a sign to us that vulnerability to rising global rates is high," Brooks said.
Alastair Wilson, director of global ratings at Moody's, said worries were rising as a string of states fail to get a grip on leverage.
"Debt remains extremely high by historic standards. Significant 'event risks' are looming in the background," he said.
Moody's said capital outflows from Asia over the last month had already been roughly half the pace of the taper tantrum, with the frontier markets most exposed.
Mongolia must roll over its entire debt stock (80 per cent of GDP) within three years. The agency has already downgraded 20 sub-Saharan countries in Africa, compared to just two upgrades.
Mauro Leos, Latin America chief at Moody's, said Argentina was first in the firing line because of its unsustainable "twin deficits", with the current account gap ballooning to 5 per cent of GDP.
Foreign direct investment covers only a third of this funding need. The rest has to come from capital inflows. Foreign exchange reserves were too thin to ride out the storm.
This left the country vulnerable to a "sudden stop" if confidence snapped, which is what happened when the Macri Administration bullied the central bank into cutting interest rates in January despite surging inflation.
"The message is don't mess with central banks," said Leos, speaking at a Moody's forum in London.
The peso has fallen by 22 per cent against the US dollar so far this month. It is a debacle painfully familiar for long-suffering Argentines. The central bank has had to raise rates to 40 per cent. It is rapidly burning reserves trying to defend an arbitrary exchange line of 25 pesos to the US dollar.
Credit default swaps measuring risk on Argentine debt have continued rising to 450 basis points despite the decision by president Mauricio Macri to request a US$30b "flexible credit line" from the International Monetary Fund, a hated body in the country.
Negotiations may take months, leaving the door open for capital flight.
William Jackson from Capital Economics said Turkey's reliance on external finance exceeds that of Argentina.
Banks have been drawing heavily on the wholesale capital markets to fund a frothy credit boom, raising "roll-over risk" if capital flows freeze up. Foreign debt exceeds 50 per cent of GDP.
President Recep Tayyip Erdogan said defiantly this week that he will continue forcing the central bank to hold down interest rates if he wins re-election in June. This will drive the overheating economy towards an inflationary blow-off. The lira weakened a further 2.4 per cent to a record low of 4.47 against the US dollar after he spoke.
Capital Economics said Brazil, South Africa and a long list of countries may have to keep rates higher than they would otherwise like as the US tightens, with even Romania and Chile looking stretched. The emerging market universe is already growing more slowly. China is coming off the boil. Global trade volumes have slipped.
The fate of debtor states now hinges on the US dollar. If the DXY rally fades, it will take some pressure off the most vulnerable, although it will not stop their borrowing costs rising. There is no sign of such relief yet.
The last time US monetary tightening rattled global markets was during the Chinese currency wobble in late 2015 and early 2016.
The circuit-breaker in that episode was a sudden pirouette by the Yellen Fed. It retreated from planned rate rises and rescued China at a delicate moment.
The new Fed chairman Jerome Powell is less inclined to mercy.
In a speech earlier this month he insisted - to general consternation - that "corporate debt at risk" in China and other developing countries was a diminishing problem, and that improvements to fiscal and monetary regimes shielded many from an external shock.