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Expectations of deflation emerging markets during 2015
February 8, 2015 8:11
Image from: Reuters - Arabian Eye
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Cairo -mbacr: QNB report predicted that 2015 will be another year of volatility in capital flows to some emerging markets, in parallel with a number of risks facing the global economy.
The report added that it is likely that the rise in the dollar exchange rate leads to the side of the expected normalization of monetary policy in the United States this year to put more pressure on the fragile capital flows towards emerging markets and increase deflationary pressures. As a result, we can expect further weakness in the exchange rate, high interest rates, weak growth and financial market instability in some emerging markets.
The report said that after the instability experienced during 2014, it is likely that capital flows remain about the emerging markets volatile in 2015. The year 2014 has witnessed great changes in the global financial conditions, including the significant decline in commodity prices and the end of quantitative easing in the United States and rising dollar exchange rate. In the future, these developments, especially the decline in crude oil prices, will lead to significant variation in the performance of emerging markets, which will increase the risks faced by certain countries such as Nigeria, Russia and Venezuela.
Consequently, we expect continued volatility in the internal flows of the portfolio towards emerging markets during 2015, particularly the possibility of raising interest rates in the United States by the Fed may attract capital inflows to the United States with the continued slowdown in growth in emerging markets and the survival of low commodity prices.
He added that capital flows to emerging markets may be towards the end of 2013, fell with the beginning of 2014, where a reduction in quantitative easing program in the United States to tighten liquidity conditions at the global level. In mid-2014, capital flows toward emerging markets recovered, although it slowed down again in the second half of the year ($ 86 billion compared to 131 billion in the first half of the year, according to Institute of International Finance (IIF)).
And resulted in the end of the quantitative easing program in the United States to another wave of capital flight from emerging markets for the weaker exchange rates and prompted some countries to raise interest rates. This in turn weaker growth prospects in emerging markets and resulted in the escape of a large global risks. A number of emerging markets debt denominated in the US dollar, which increases the burden them with the high dollar exchange rate.
He pointed out that during 2014, there was a large variation in the emerging markets among those that have been able to take action to reduce the current account has a deficit and stabilizing their exchange rate measures (especially India and Indonesia) and between markets that are still struggling to restore confidence in their economies ( Brazil, Nigeria, Russia, South Africa, Turkey and Ukraine). It was the fall in world commodity prices, especially crude oil, the most important behind the loss of confidence in this group defended from markets
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February 8, 2015 8:11
Image from: Reuters - Arabian Eye
Related News
Cairo -mbacr: QNB report predicted that 2015 will be another year of volatility in capital flows to some emerging markets, in parallel with a number of risks facing the global economy.
The report added that it is likely that the rise in the dollar exchange rate leads to the side of the expected normalization of monetary policy in the United States this year to put more pressure on the fragile capital flows towards emerging markets and increase deflationary pressures. As a result, we can expect further weakness in the exchange rate, high interest rates, weak growth and financial market instability in some emerging markets.
The report said that after the instability experienced during 2014, it is likely that capital flows remain about the emerging markets volatile in 2015. The year 2014 has witnessed great changes in the global financial conditions, including the significant decline in commodity prices and the end of quantitative easing in the United States and rising dollar exchange rate. In the future, these developments, especially the decline in crude oil prices, will lead to significant variation in the performance of emerging markets, which will increase the risks faced by certain countries such as Nigeria, Russia and Venezuela.
Consequently, we expect continued volatility in the internal flows of the portfolio towards emerging markets during 2015, particularly the possibility of raising interest rates in the United States by the Fed may attract capital inflows to the United States with the continued slowdown in growth in emerging markets and the survival of low commodity prices.
He added that capital flows to emerging markets may be towards the end of 2013, fell with the beginning of 2014, where a reduction in quantitative easing program in the United States to tighten liquidity conditions at the global level. In mid-2014, capital flows toward emerging markets recovered, although it slowed down again in the second half of the year ($ 86 billion compared to 131 billion in the first half of the year, according to Institute of International Finance (IIF)).
And resulted in the end of the quantitative easing program in the United States to another wave of capital flight from emerging markets for the weaker exchange rates and prompted some countries to raise interest rates. This in turn weaker growth prospects in emerging markets and resulted in the escape of a large global risks. A number of emerging markets debt denominated in the US dollar, which increases the burden them with the high dollar exchange rate.
He pointed out that during 2014, there was a large variation in the emerging markets among those that have been able to take action to reduce the current account has a deficit and stabilizing their exchange rate measures (especially India and Indonesia) and between markets that are still struggling to restore confidence in their economies ( Brazil, Nigeria, Russia, South Africa, Turkey and Ukraine). It was the fall in world commodity prices, especially crude oil, the most important behind the loss of confidence in this group defended from markets
[You must be registered and logged in to see this link.]
