Tags: Emerging | Markets | Risk | Higher | Rates

Experts: Higher Rates Endanger Emerging Markets

Tuesday, 16 Mar 2010 09:41 AM

By Dan Weil

Experts fear that interest-rate increases in emerging market economies could send their stock markets plunging and endanger the global economic recovery.

Central banks in emerging market nations are beginning to tighten policy. Experts anticipate substantial rate hikes in Brazil, Turkey, Mexico and India.

“Although central banks are right to introduce policies to restrain inflation, they must not tighten too far, too fast,” Nigel Rendell, senior emerging market strategist at RBC Capital Markets, told the Financial Times.

China too is tightening monetary policy by lifting capital reserve requirements.

Some experts see the renminbi rising as much as 5 percent by year-end, which would dampen China’s export growth.

Of course, a strengthening of Asian currencies could be good news for the global economy, because it would make U.S. and European exports more competitive. And that would provide a much-needed spur for growth in the U.S. and Europe.

Not everyone sees emerging market rate hikes as cause for concern.

“The key point is that this is a return to more normal interest-rate levels. We should not worry too much over aggressive tightening,” Gary Jenkins, head of fixed income research at Evolution, told the FT.

Gold-plated bond fund manager Pimco isn’t too worried either. It has been bulking up on Brazil and Eastern European bonds.

“We have every comfort that the policy in Brazil will remain sound,” Michael Gomez, Pimco’s co-head of emerging markets told Bloomberg.

© 2015 Moneynews. All rights reserved.

Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Actor's Stand for Diversity Lost in Translation

Wednesday, 28 Jan 2015 09:31 AM

Actions matter more. Beliefs matter more. Words matter in part because they convey beliefs, and there is no question, if . . .

Women's Rights Shamefully Assaulted Again

Friday, 23 Jan 2015 09:32 AM

These days, it's the Republicans who are squirming about abortion, and not very discreetly. They made all kinds of noise . . .

Show Me the Money Primary

Wednesday, 21 Jan 2015 09:47 AM

In theory, under the new rules, the fact that Hillary Clinton has locked up 99 percent of the big Democratic money (OK,  . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved