JEMTF - Financial Stability Implications Of Emerging Market Currency Developments

2024-07-23 15:40:00 ET

Summary

• Emerging market currencies have depreciated against the US dollar as interest rate differentials narrowed, despite stable economic growth projections.
• Interest rate differentials with the US are a key driver of exchange rates, leading to currency depreciations in some emerging markets.
• Central banks in emerging markets are focused on domestic inflation targets, but exchange rate volatility remains a consideration for policy decisions.

By Tobias Adrian, Financial Counsellor, Director of the IMF's Monetary and Capital Markets Department, Fabio Natalucci, Deputy Director of the Monetary and Capital Markets Department, & Jason Wu, Assistant director overseeing Global Markets and Analysis division at the IMF ...

For further details see: