Currencies go wrong.
Emerging markets are in turmoil in recent days, their currencies
value are decreasing, financial aids are declining and inflation is rising.
Recent Fed publications indicate that the unemployment rate is
reassuring for the future which might end the accommodate monetary policy of
the U.S. central bank.
The average results in these emerging countries and the fear of no
more additional American financial aid has pushed the investors away.
According to the report in the Wall Street Journal : "Since
the beginning , the Indian rupee has declined by 3% against the dollar, the
Brazilian real has lost 3.2% , and the Indonesian rupee 2.2 %" and
according to Le Monde : " Just for the week of November 6 , asset managers
withdrew $ 1.32 billion placed in the emerging markets". Currencies from
the emerging markets are not anymore attractive.
Also, in combination of the decrease of theses currencies, the inflation
rate is increasing. Prices rise and imports also, thus promoting increased
budget deficit already in these states.
The harsh difficulties of theses countries are reflected in their
currencies, but the instability won’t last long, economists predict that
outward-oriented countries such as India
and Turkey
will have a considerable advantage in the financial markets. The investors will
have the opportunity to take profit of their actual weakness before these
currencies gain on momentum.
