THE outflow of foreign capital from emerging markets is the trend these days. The ringgit, which has been described as being in a tight spot, has fallen 6.6% since May 22, when the Fed first raised the spectre of an early stimulus withdrawal, reports the Singapore Business Times. The ringgit has been trading at three-year lows against the US dollar, and month-long selling has pushed 10-year Malaysian government bond yields to their highest in 2½ years, says the report. The reason is “an exodus of foreign capital, as investors reassess emerging markets most at risk from a withdrawal of US easy money policy,” it adds. The Indian rupee has dropped more severely by 8.5% since May 22. India has been described as being “caught in the middle”, as the United States ponders tapering off its quantitative easing policy, causing volatility in emerging markets, as investors pull money out. India was enjoying a growth rate of 9% just two years ago. Now, the Reserve Bank of India is forecasting growth at 5.5% for the fiscal year ending next March, says the SBT.
Posted on: Tue, 13 Aug 2013 04:51:59 +0000