Banks try to contain damage
LONDON — Following a bout of market turmoil that has weighed on their currencies, central banks in emerging economies are moving fast to contain the damage.
Late Tuesday, Turkey's central bank raised its key interest rate to 12 percent from 7.75 percent to try to stave off inflation and support the national currency, which has fallen sharply in recent weeks.
The decision was taken at an emergency meeting the central bank called for after the currency, the lira, hit a record low.
The People's Bank of China on Tuesday injected more money into the country's financial markets to ease strained credit conditions. India's central bank unexpectedly raised interest rates to prop up its ailing currency.
Much of the turmoil in global financial markets over the past week has been due to developments in emerging economies. Argentina suffered the most eye-catching fall in its currency amid concerns over the government's economic policies.
However, there are broader worries that emerging markets, which have been some of the fastest-growing in recent years, are particularly vulnerable at the moment. Among the key risks are China's economic slowdown and the U.S. Federal Reserve's decision to scale back on its monetary stimulus. The Fed is expected to announce another $10 billion reduction in its monthly bond purchases to $65 billion. For the past few years, the Fed's stimulus has helped shore up financial markets around the world.