Despite deeply negative local returns, countries for the most part avoided spending foreign exchange reserves in an attempt to stabilise the currency.
SINGAPORE (Jan 10): Yields on USD emerging market debts are reaching 7% for major indices, and as emerging markets enter 2019, it is expected to recover from the negative effects of a stronger USD and outsized US growth, according to a Schroders TalkingPoint report for January.
These effects shifted liquidity away from the asset class, similar to the 2014-2016 period when the Fed first began ending quantitative easing and raising interest rates. Also much like that period, currencies have been the adjustment mechanism of choice for stressed countries.
