IMF calls for co-ordinated banking action
The International Monetary Fund has advised struggling countries to take immediate action in making themselves more competitive, stating that a co-ordinated banking action could help prevent a currency crisis.
Investors have been moving their money from emerging markets at the fastest rate for three years, showing a definite lack of confidence and destroying local currencies. There are concerns that this will be disastrous for a number of emerging markets.
The governor of India’s central bank has criticised the U.S Federal Reserve’s decision to start tapering its economic stimulus in December. America’s asset buying has a significant effect on the rest of the world’s economies and has been a major problem in turning investors away from emerging markets.
African and Asian economies have been hit hard, as well as eastern European countries such as Hungary and Poland; Hungary’s forint reached a two-year low against the US dollar last week and the Polish zloty is also struggling. In Russia the rouble dropped by 1% to its lowest rate in 5 years.
In the global stock markets the FTSE 100 fell to 6,510.44 points with a decrease of 28.01 points (0.4%) in January, the biggest monthly fall since last June. This was also the worst first month performance for four years.
Those that had a higher-than-average exposure to emerging markets suffered the biggest losses. In Germany, the German Dax fell by 0.7%, and the French CAC saw a decrease of 0.3%.