Dallas Fed finds emerging markets insulated against US rate rises

economy risks

Emerging market economies have insulated themselves well from the US’s tightening cycle, researchers from the Federal Reserve Bank of Dallas find.

The Federal Reserve’s tightening and the associated sudden shift in capital flows was mitigated by proactive rate rises, improving external balances and accumulated foreign exchange reserves.

“Earlier episodes of sizeable Fed tightening preceded destabilising currency devaluations in emerging markets,” the researchers say, “precipitating sovereign

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