Simon Lloyd, Giancarlo Corsetti and Emile Marin
A striking regularity around global economic crises is that the dollar tends to appreciate sharply against emerging market (EM) currencies as capital flows out of EMs. In this respect, the adjustments observed since the onset of the COVID pandemic are no exception. Since the end of February, EM currencies have depreciated by around 15% (on average) and non-resident portfolio outflows from EMs summed to nearly $100 billion over a period of 45 days.
Continue reading “Bitesize: Emerging market currency risk: evidence from the COVID-19 crisis”