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 ...
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Financial Stability Implications Of Emerging Market Currency Developments