Emerging markets will face stress as they cope with a stronger dollar and rising interest rates but Asia appears to be insulated, for now, according to Raghuram Rajan, former governor of the Reserve Bank of India.<\/p>\n
Tipping the Federal Reserve to raise interest rates another three times this year, Rajan said that developing economies are in a stronger position to absorb those hikes compared with the so-called taper tantrum in 2013. But he cautioned that accidents can happen.<\/p>\n
\u201cThere will be still stresses for emerging markets, they will have to cope with a rising dollar and rising international interest rates and the flow back of capital flows,\u201d Rajan said in an interview with Bloomberg Television\u2019s Haslinda Amin in Singapore on Tuesday. He cited Turkey, Argentina and Brazil as risks and also highlighted Italy as a key concern.<\/p>\n
For Asia, narrow current account deficits, moderate inflation and resilient currencies mean the region is insulated.<\/p>\n
After a stellar run than began in early 2016, emerging-market assets have come under severe pressure in recent months, most notably in Argentina, where the peso has plunged 19% against the dollar this quarter, and in Turkey, where the lira is down 14%.<\/p>\n
Economists like Andrew Tilton at Goldman Sachs Group Inc. say economic fundamentals are mostly intact, while fund managers like Patricia Ribeiro at American Century Investment Management say investors aren\u2019t treating emerging markets as a monolithic bloc anymore.<\/p>\n
\u201cI can\u2019t find one reason today that we can tie all these countries together,\u201d said New York-based Ribeiro, whose main fund has beaten 91% of its peers over the past 12 months. It\u2019s \u201ccompletely the opposite of what we saw back in the 1990s\u201d when these countries pegged their currencies at very depreciated prices to boost exports and generate dollars, she said.<\/p>\n
In Asia, India has been one of the hardest hit economies in the emerging-market rout, with the rupee down almost 5% against the dollar this year. That\u2019s adding to pressure on inflation and pushing the central bank closer to an interest-rate hike, possibly as early as Wednesday.<\/p>\n
Current RBI governor Urjit Patel made a plea to the Fed to slow the pace that it\u2019s shrinking its balance sheet to help emerging economies cope with the turmoil.<\/p>\n
Rajan said the Fed will probably stay the course with its planned tightening cycle since it\u2019s focused on domestic growth and labour-market conditions. The Fed meets next week and is expected to raise interest rates.<\/p>\n","protected":false},"excerpt":{"rendered":"
Emerging markets will face stress as they cope with a stronger dollar and rising interest rates but Asia appears to be insulated, for now, according to Raghuram Rajan, former governor of the Reserve Bank of India. Tipping the Federal Reserve to raise interest rates another three times this year, Rajan said that developing economies are […]<\/p>\n","protected":false},"author":1,"featured_media":33144,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[410],"tags":[],"class_list":["post-33143","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/posts\/33143","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/comments?post=33143"}],"version-history":[{"count":1,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/posts\/33143\/revisions"}],"predecessor-version":[{"id":33145,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/posts\/33143\/revisions\/33145"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/media\/33144"}],"wp:attachment":[{"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/media?parent=33143"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/categories?post=33143"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/tags?post=33143"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}