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Fischer Sees Emerging Markets Weathering US Rate Rise

The Vice- Chairman of the Federal Reserve Board, Stanley Fischer said that interest rate increases in the US and its repercussions would be “manageable for the Emerging Markets”.

Speaking to an audience in Tel Aviv, he said that emerging markets (EM) had made remarkable progress in reducing inflation, improving government debt ratios, building foreign reserves and tightening bank regulations.

Fischer speaks at a time when there is global concern over repercussions of a possible US rate hike, the first one in eight years. The possibility of a US rate hike comes at a time when US economic data is weak and some experts fear that it could set off large capital outflows from Latin America and Asia. However, given the overall strong foreign reserves in EM countries which have amassed to USD $7.74 tn since the 1990’s according to International Monetary Fund (IMF) and development of local currency debt markets are factors which will help EM countries to weather the upcoming interest rate storms.

Reference:
http://www.ft.com/intl/cms/s/0/71732150-03c4-11e5-8585-00144feabdc0.html#axzz3bYC0DQ6B

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