The fall in emerging market currencies since the beginning of this year has picked up pace this month. Two main forces appear to have been at work. First, the depreciation of the euro has led the currencies of countries in Central and Eastern Europe (CEE) to fall against the dollar, as these countries have strong financial and trade ties with the euro-zone. Second, last Friday’s strong US Employment Report renewed concerns about the vulnerability of the currencies of emerging market countries with large current account deficits to tighter Fed policy.
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