Arab Today, arab today pressure on emerging markets despite rate hikes
Last Updated : GMT 18:15:34
Arab Today, arab today
Arab Today, arab today

Pressure on emerging markets despite rate hikes

Arab Today, arab today

Arab Today, arab today Pressure on emerging markets despite rate hikes

Washington - AFP

Sharp interest rate hikes by Turkey and South Africa failed Wednesday to stem the falls in their currencies as emerging market economies around the world continued to battle capital outflows. Russia, Brazil and Argentina also faced further drops in their currencies even as the International Monetary Fund stressed there was not a general panic and that each faces specific challenges. Eyes were on the Federal Reserve's policy meeting to see if the US central bank would further cut its stimulus, which could send dollar interest rates high and accelerate the emerging market selloff. "This is not like May, this is not a panic situation," Jose Vinals, director of the IMF's Monetary and Capital Markets Department, insisted on Tuesday. Nevertheless, faced with crumbling currencies, the central banks of India, Turkey and South Africa all hiked their key interest rates early Wednesday. Turkey dramatically doubled its key rate to 10.0 percent, while South Africa announced a shock rise of half a percentage point to borrowing costs. In India, the rise was a modest quarter-point, aiming to slow inflation, itself also partly a consequence of the rupee's slump. The moves had momentary impact on the respective currencies, but by the end of the day only found brief relief. The Turkish lira jumped, but then shed half its gains. It leapt by about 3.0 percent overnight to 2.17 to the US dollar in response to the central bank's U-turn, but later fell back to 2.25. In South Africa, the rand got little respite from the Reserve Bank's decision. The rand hit a new five year low of 11.3803 to the dollar shortly after the rate hike announcement, although it rebounded in later trade to 11.20, still lower than prior to the rate hike. "With all these emerging market central banks raising interest rates, South Africa simply had to follow suit. But they went in half-hearted and the market seems to have called their bluff," said Fawad Razaqzada at Forex.com. In Russia, the ruble tumbled to a record low 48 rubles to the euro. In Brazil, the real hit 2.45 per US dollar, it's worst level since August and close to the lows of 2008 and 2009. And Argentina's peso also slipped again despite the central bank's effort to stem its fall by loosening exchange controls. Numerous analysts pointed to the expected second cut in as many months to the US Fed's quantitative easing program, an effective tightening of the easy-money program. When the Fed first mooted the taper of the $85 billion a month program early last year, US interest rates jumped and capital flowed out of emerging economies. The Fed finally cut $10 billion beginning this month, and most economists expect it to announce another $10 billion cut on Wednesday. "Anticipation of another round of tapering had caused chaos and turmoil in emerging market," said currency dealer Amir Khan at London-based Currencies Direct. But the IMF says the current problems facing emerging markets are not tied to Fed policy. Vinals called the turbulence "a combination of idiosyncratic factors." "We don't see the commonality that existed in May, which wasthe US tapering. This is something where the US monetary policy tapering expectations have so far not played an important role," he said. The jitters are signs that the emerging economies "have yet to complete their adjustment to more volatile external conditions and higher risk premiums," he said Neil MacKinnon, economist at Russian financial group VTB Capital said the Fed "might take the view that the problems afflicting the emerging economies are 'home grown' in the sense that it is those economies with high current account deficits and thin levels of foreign exchange reserves, like Turkey and South Africa' that have been the subject of the financial markets' focus."

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today pressure on emerging markets despite rate hikes Arab Today, arab today pressure on emerging markets despite rate hikes

 



Arab Today, arab today
Arab Today, arab today Hats, scarves add beauty to women

GMT 19:10 2017 Friday ,17 February

Hats, scarves add beauty to women
Arab Today, arab today Tourist guide reveals methods of tourist attractions

GMT 17:46 2017 Saturday ,18 February

Tourist guide reveals methods of tourist attractions
Arab Today, arab today To release new antiques collection

GMT 20:33 2017 Friday ,17 February

To release new antiques collection
Arab Today, arab today Air raid kills eight women, child

GMT 06:42 2017 Friday ,17 February

Air raid kills eight women, child
Arab Today, arab today Murder of 2 reporters in Dominican Republic

GMT 22:45 2017 Thursday ,16 February

Murder of 2 reporters in Dominican Republic

GMT 05:26 2017 Sunday ,19 February

US natural gas market tightens

GMT 05:06 2017 Sunday ,19 February

Merkel: Euro is too low for Germany

GMT 04:58 2017 Sunday ,19 February

Swedish PM: Brexit deal in 2 years is unlikely

GMT 20:02 2017 Saturday ,18 February

Gold edges higher as global equities lose momentum

GMT 10:20 2017 Thursday ,16 February

New Zealand's Spark rings up interim profit rise
View News in Arabic - Business: نفط وبتروكيماويات
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Kidogo provides childcare for underserved

GMT 20:24 2017 Wednesday ,15 February

Kidogo provides childcare for underserved
Arab Today, arab today Tragic fluctuations of Bakhtiari's life revealed

GMT 06:50 2017 Wednesday ,15 February

Tragic fluctuations of Bakhtiari's life revealed
Arab Today, arab today London to tax old cars

GMT 14:06 2017 Friday ,17 February

London to tax old cars
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today Competes Sweden and Germans by S90

GMT 22:36 2017 Thursday ,16 February

Competes Sweden and Germans by S90
Arab Today, arab today Porsche reveals new 2018 Panamera

GMT 17:31 2017 Wednesday ,15 February

Porsche reveals new 2018 Panamera
Arab Today, arab today Actress Nadeen Al Rassi views art as her entity

GMT 07:30 2017 Saturday ,18 February

Actress Nadeen Al Rassi views art as her entity
Arab Today, arab today Teach monkeys to recognize themselves in mirror

GMT 20:41 2017 Wednesday ,15 February

Teach monkeys to recognize themselves in mirror

GMT 07:05 2017 Friday ,17 February

Singer Diana Karzon will issue a new album soon

GMT 06:40 2017 Friday ,10 February

MP calls for removing text from Islamic story

GMT 13:16 2017 Tuesday ,14 February

First fashion model with Down syndrome

GMT 10:26 2017 Tuesday ,14 February

Emergency UN meeting in Harare

GMT 14:04 2017 Tuesday ,14 February

"Lagom" new Swedish concept in interior design

GMT 12:07 2017 Thursday ,16 February

Bite-mimicking malaria vaccine

GMT 09:03 2017 Thursday ,16 February

Tour guide praises women’s beaches

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre

GMT 15:16 2017 Sunday ,19 February

Apple to start India operations with iPhone SE

GMT 21:42 2017 Sunday ,12 February

Rania al-Ghazali designs candles of bubbles
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday