Hot money exodus ends currency wars
World Chaos News – Sydney Morning Herald - Turkey’s efforts to pull the lira off record lows on Monday are likely to be emulated across emerging markets as central banks fight to avert an exodus of foreign capital driven by the impending turn in US policy.
It’s all a far cry from a year or so ago, when emerging market exporters were battling rising exchange rates and [url=http://maps.google.com/maps?ll=-15.7833333333,-47.8666666667&spn=10.0,10.0&q=-15.7833333333,-47.8666666667 %28brazil%29&t=h]Brazil[/url] was accusing Western policymakers of waging currency wars by flooding the world with cheap money.
Turkey is now tightening its policy as the US Federal Reserve considers reducing the flood of cheap money that has stoked the investment boom in emerging financial markets.
Swaps markets are pricing in interest rate increases across the developing world, in some cases of hundreds of basis points, reflecting the new worry for emerging central banks: currency collapse.
Last week’s robust jobs data from the [url=http://maps.google.com/maps?ll=38.8833333333,-77.0166666667&spn=10.0,10.0&q=38.8833333333,-77.0166666667 %28United states%29&t=h]United States[/url] has upped the stakes for emerging markets by crystallising belief the Federal Reserve will start unwinding its $US85 billion monthly stimulus by autumn. Futures contracts moreover now expect a US interest rate rise as early as 2014.Read full article smh.com.au/
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