Investors in emerging economies – particularly Asia – remain jittery amid turmoil in their stock exchanges and as currency values tumble.
The problems have been triggered by concerns about the expected scaling back by the Federal Reserve of its stimulus measures in the US.
Much of the money that the Fed has been printing has found its way into those developing countries.
Fears that the cash flow could be reversed prompted a sell-off of shares along with currency slumps in places like Brazil and Thailand, and particularly Indonesia and India:
Jim Walker with the economic research firm Asianomic explained why they have been hardest hit: “The fact is that India and Indonesia were standouts in terms of their current account deficits. Everywhere else in the region really is running a current account surplus. And if you look at the way currencies have behaved over the course of the last month they’re really not that much changed from a month ago, whereas in India and Indonesia the changes have been pretty spectacular.”
Those two countries may be suffering most, but the effects are also rippling out through the stock markets and currencies of Japan, China, Australia and New Zealand.
Economists said things could settle down once the Fed’s plans for stimulus reduction become more clear.