THE IMPACT OF FED TAPERING NEWS ON EMERGING MARKETS
1
Author(s):
NEHA GUPTA
Vol - 5, Issue- 8 ,
Page(s) : 206 - 211
(2014 )
DOI : https://doi.org/10.32804/IRJMST
Abstract
Abstract
Following the global downturn post 2008, the advanced economies of the world particularly the US followed accommodative monetary policies through some unconventional measures. Since then, the US economy has started gradual although slow signs of improvement and now the policymakers have decided to cut back on its assets purchases. This has resulted in tremendous capital outflow from the emerging economies and adverse impact on their exchange rates. This essay attempts to analyze the capital movement trends observed in the emerging markets following the FED’s announcement of tapering in May 2013. Through analysis of various literatures and observed trend, we observe that countries who allowed their current account deficits to widen during the quantitative easing program felt the biggest burnt. These countries with biggest and most liquid financial markets allowed investors easy opportunities to sell off with limited losses.
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