Emerging markets are losing its value and stock market across the developing world which are in re-run of Asian financial crisis of 1997.
It wasn’t the serious condition about the re-run of 1997. Asia fell much server financial crisis in 1997 like Thailand, Indonesia and south korea which had become the foreign credit dependent. When it dried up, it hit severely. The main impact was currency crashed, unemployment soared, economies tumble etc. It has become e serious talk of financial meltdown globally.
The current situation is quantitatively different from the sudden episode of crisis which feels like the culmination of some deeper structure in the world economy.
Emerging market currencies have lost value against the dollar and currently stand at a six and a half year low in average.
Emerging market has lost its value against dollar which can stand currently at six and half year in aggregate.
The financial times today’s report that almost $1 trillion capital has flowed out due to emerging economies in last 13 months.
After six years for zero interest rate, it has made the extraordinary policy quantitative easing. The federal reserve of US closed all the interest rate in almost a decade.
The return available in US again arise which is more attractive for often lose capital globally. This push the dollar up and drive the capital out flow from the emerging world.
The monetary policy of US especially for the last six month is highly unused which would be an issue for emerging market but it is just about everything which could be wrong at the same time.
The three long trending factor support economies growth and financial Market return across. The developing economies which appear to be either reversing or slowing.
The process of economies globalisation has expressed through world trade.
2015 is says to be the fourth consecutive year for the world trade which slower the global GDP growth. This led various expert growth strategies that has many emerging economies to perused as much ticker.
The oil price has collapsed its commodity at around $110 barrel last summer to move around $50 today. The price of thing sis like industrial metal which has collapsed.
Financial condition are getting tougher which hasn’t relate through the coming rise in US interest rate that becomes the catalyst for the recent sell-off.