Communication in Economics - Essay Example

In Turmoil, Emerging Markets Raise Rates By____________, The report of Catan, Anand and Murphy d that in current days, the central banks of key emerging economies are increasing their respective interest rates in order to curtail the outflow of funds. There lay several evidences that support this particular statement. For instance, in Indonesia, the central bank has increased the benchmark rate by 0.5 percent point. Similarly, central banks of Brazil and Turkey have also increased their benchmark rate by 0.

5 and 1 percentage point respectively. The reason for taking this step is to counter the growing economic pressure that arises from weakening of currencies in emerging nations. It is quite apparent that currencies and stock markets in emerging economies particularly in countries such as South Africa, India, Turkey and Indonesia among others got affected as several investors are starting to pull back their funds from the emerging economies due to financial fluctuations. According to the report, the US Federal Reserve has scaled back nearly US$85 billion from the developing nations during the period of August’ 2013 (Catan, Anand and Murphy, “In Turmoil, Emerging Markets Raise Rates”).

It can be apparently observed in this recent times that India’s Rupee, Brazil’s Real, Turkey’s Lira and Indonesia’s Rupiah have fallen considerably against US Dollar. In this regard, the investors are presently hastening to purchase dollar because of the expectation that the US will start to cut the monetary stimulus. Due to this reason, emerging markets or economies are increasing the interest rates with the intention that this might assist in stanching the massive outflow of funds through making the assets of the developing nations more attractive especially for the investors (Akhtar, “Pressure Building on Emerging Markets”).

Works CitedAkhtar, Tanzeel. Pressure Building on Emerging Markets. Interactive Investor, 2013. Web. 01 Sep. 2013. . Catan, Thomas, Shefali Anand and Tom Murphy. In Turmoil, Emerging Markets Raise Rates. The Wall Street Journal, 2013. Web. 01 Sep. 2013 .