Submerging markets

Submerging markets

News:

1. Indian rupees hits new all-time low of Rs.71.

Important Facts:

1. Emerging market economies currencies slides against the U.S. dollar.
2. ImportantNumbers

• Indian rupees hits new all-time low and touched the mark of Rs.71 against $1
• Loss of about 10% of its value against the dollar since the beginning of the year.
• Argentina Peso lost more than 50 % of its value in 2018 and sharp loss of 10 % alone on Thursday despite 15 % increase in interest rate.
• Turkish Lira almost lost half of its value this year.

1. Domestic economic issues in Turkey and Argentina has further intensified the crisis.
2. But the common reason is increasing demand for U.S Dollar in emerging markets.
3. Tightening monetary policy and increase in interest rate by U.S federal bank has yielding high results.
4. As a result of this investors shifting their capital from Emerging markets to American assets.
5.  Emerging countries earlier benefited from easing of monetary conditions in the West are now facing challenges on reversal of monetary policy and cannot blame western countries for currency crisis.
6. Management of economic policies such as high inflation rate in Argentina and Turkey has a major impact.
7. Drastic change in emerging market monetary policy is required in a long run.