Financial markets across the emerging world have rallied in the wake of the Fed’s decision to delay QE tapering, easing concerns that several EMs were on the cusp of currency crises. As it happens, these fears were probably overdone. It’s worth noting that EM currencies had already rallied ahead of the Fed meeting as perceptions that the summer sell-off had gone too far had started to build. And while the trend in most EMs over the next year or so is likely to be towards renewed dollar strength (and local currency weakness), this won’t pose the same risks to balance sheets as it has done in the past. EM growth is likely to remain lacklustre, but it’s not the fault of the Fed.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services