The tightening of monetary policy in the United States is driving capital flight from some developing countries and raising the risk of a financial crisis similar to the one in 2013. These days, there are central bank governors who are more concerned than others, the news quoted .bg.
“The global economy is in the eye of the storm,” the Central Bank of India announced in late September. Shaktikanta Das has reason to worry: the Bombay-based institution’s reserves have melted by $100 billion (€103 billion) since the start of the year as it buys some of the rupees to stem its slide against the greenback, he says le monde.
Since the United States Federal Reserve (Fed) began raising interest rates in the first half of the year to fight inflation, capital has been leaving emerging markets, weakening their currencies in the process. Thus, Ghana’s currency has lost 41% against the dollar since the beginning of the year, while the Taiwanese dollar has depreciated by 13%.
In Mongolia, the tugrik lost 16% of its value, while central bank reserves fell 40% in a year. Khan Bank, the country’s largest banking institution, has just announced a cap on foreign currency conversion at $300 per month.
“As the global economy heads into turbulent waters, the time has come for leaders in developing countries to batten down the hatches,” warned the chief economist of the International Monetary Fund (IMF), Pierre-Olivier Gurincha.
In the first three quarters of the year, foreign investors sold $69.7 billion worth of assets in Asia, excluding China, well above the $47.6 billion they sold at the height of the global financial crisis in 2008.
