Higher interest rates prove a challenge for reserve managers

Photo of magnified dollar

Higher interest rates in the US and a strong dollar are challenging central banks in emerging economies, but better management should help them navigate this new environment.

The rate hikes implemented by the Fed since December 2015 are finally tightening financial conditions, and offering higher yields to international investors. This is boosting the dollar and putting emerging currencies under pressure.

However, a repeat of the sorts of capital outflows and depreciations registered during

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