Europe & America:
Argentina and Ukraine have been working to stabilise their currencies in the face of investor nervousness.
Asia:
The Reserve Bank of India (RBI) raised the benchmark repo rate - the amount at which it charges to lend to commercial banks - to 8% from 7.75%. The purpose was to stem inflation
The ringgit slumped to its historical low against the Singapore dollar to close at 2.6214 yesterday, declining further from last Friday’s close of 2.6066. The ringgit had depreciated 0.03% to close at 3.3468 against the greenback. It briefly touched 3.3485 in the early trade, which was the lowest level since May 26, 2010. The ringgit traded lower against the euro to close at 4.5844 from 4.5004 last Friday.
Tapering:-
US, the Federal Reserve is expected to continue to withdraw its extraordinary stimulus measures at the end of a two-day meeting on Wednesday - which is causing some concern in the markets.
Many investors fear that as this programme is drawn down, interest rates not just in the US but around the world could rise, and adversely impact emerging economies in particular. The concern and fear are valid. Just look at last year when fund pulled out from Asia, what happened to Indonesia, India, Thai and Malaysia currencies. Interest rate goes up, borrowers are going to pay more. Just look at the past Asia crisis. Let say you loan one million from the bank. Your monthly instalment is $2,000/months. Interest rate gone up from 1.2% to 3%. Ask yourself, how much more you need top up on top of that $2,000/month instalment. Worst, you property value dropped by 20% and bank ask to offset the different. See how Turkish raise the interest rate, is really a concern. Yes, you see the impact on lira, but what about the other side of cons.
Turkish central bank raised
its overnight lending rate to 12% from 7.75%. It also increased the overnight borrowing rate to 8% from 3.5%. The move claimed was intended to help stabilise the value of the lira, which plunged
in recent days amid ongoing turmoil across emerging markets. The lira immediately strengthened after the central bank announcement, to 2.2
lira to the US dollar, from 2.253.
Argentina and Ukraine have been working to stabilise their currencies in the face of investor nervousness.
Asia:
The Reserve Bank of India (RBI) raised the benchmark repo rate - the amount at which it charges to lend to commercial banks - to 8% from 7.75%. The purpose was to stem inflation
The ringgit slumped to its historical low against the Singapore dollar to close at 2.6214 yesterday, declining further from last Friday’s close of 2.6066. The ringgit had depreciated 0.03% to close at 3.3468 against the greenback. It briefly touched 3.3485 in the early trade, which was the lowest level since May 26, 2010. The ringgit traded lower against the euro to close at 4.5844 from 4.5004 last Friday.
Tapering:-
US, the Federal Reserve is expected to continue to withdraw its extraordinary stimulus measures at the end of a two-day meeting on Wednesday - which is causing some concern in the markets.
Many investors fear that as this programme is drawn down, interest rates not just in the US but around the world could rise, and adversely impact emerging economies in particular. The concern and fear are valid. Just look at last year when fund pulled out from Asia, what happened to Indonesia, India, Thai and Malaysia currencies. Interest rate goes up, borrowers are going to pay more. Just look at the past Asia crisis. Let say you loan one million from the bank. Your monthly instalment is $2,000/months. Interest rate gone up from 1.2% to 3%. Ask yourself, how much more you need top up on top of that $2,000/month instalment. Worst, you property value dropped by 20% and bank ask to offset the different. See how Turkish raise the interest rate, is really a concern. Yes, you see the impact on lira, but what about the other side of cons.
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