-A weakening U.S. dollar is lifting a long-neglected asset class – emerging market local currency debt – after a more than decade-long drought.

Emerging market local​-​currency bond funds saw a new record of inflows in the week to Wednesday, according to EPFR data, notching eight straight weeks of inflows.

The nascent flows remain small – and the uncertainty of tariffs, war and other global turmoil are stemming some flows.

But investors expect they will continue, giving a boost to local debt markets in large emerging markets from Brazil and Mexico to Indonesia and India.

“Many of the big emerging markets tell us about all the foreign buying of debt, and that is starting to pick up across some countries,” said Jonny Goulden, head of emerging market fixed income strategy at JPMorgan.

Yields on the JPMorgan GBI Emerging Market local currency index are at their lowest since 2022 – partly a sign of flows of international cash. Emerging market local currency government bonds have enjoyed returns of more than 10% since the start of the year – more than double the around 4% delivered by the hard-currency peers, according to JPMorgan indexes.

The weaker U.S. dollar, and questions over the years-long U.S. exceptionalism trade – when investors parked cash in booming assets of the world’s largest economy – is nudging international investors to look elsewhere for bigger returns.