Has the Fed left emerging markets out in the cold? Just because the U.S. Federal Reserve did not mention the recent emerging-market volatility following its latest meeting it doesnt mean its not watching the turmoil closely, analysts say. The Fed on Wednesday concluded a two-day policy meeting with a decision to unwind its massive monetary stimulus program by a further $10 billion. Contrary to some expectations, the central bank did not address the sharp sell-off in emerging markets from Turkey to Argentina and South Africa, triggered in part by the scaling back of Fed stimulus that has helped underpin flows into such markets in recent years. From the viewpoint of domestic U.S. economic conditions the statement is completely anodyne. From the point of view of emerging markets, the Fed has just said hasta la vista, baby, Steven Englander, global head of G10 currency strategy at Citi, said in a note. U.S. and Asian equity markets fell sharply following the Feds move. Asian currencies headed back towards their recent lows against the dollar and the Turkish lira slipped 0.2 percent to 2.26 to the dollar, having strengthened to as much as 2.16 on Wednesday as a sharp hike in Turkish interest rates a day earlier offered the battered currency some respite. My sense is that the Fed has emerging markets on their radar screen, but so far its not signaling any major problems for them to rise to the level to be in their statement,(@DharaCNBC)
Posted on: Thu, 30 Jan 2014 13:24:48 +0000
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