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October 2018
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Monday, 08 October 2018 15:00

Emerging market pressures to continue, Fitch Ratings

Emerging market pressures to continue, Fitch Ratings

The rising cost of US dollar funding, escalating US-China trade tensions and China's slowing economy will continue to generate a challenging environment for emerging markets (EM) over the next 18 months. Tighter monetary and credit conditions are weighing on EM growth prospects, and Fitch expects Emerging Asian economies to be affected by further volatility in financial markets, which will test their resilience to external pressures. However, relatively strong fiscal and external buffers, as well as flexible policy frameworks, should limit the impact on sovereign credit profiles, Caspian Energy News (www.caspianenergy.net) reports with reference to Fitch Ratings.

Fitch forecasts that the Fed will raise its policy rate four more times by end-2019 points towards further US dollar appreciation, weak capital flows to EMs, and a risk of further bouts of EM volatility. Meanwhile, the rising cost of funding in US dollars is likely to continue to create pressures for borrowers in global credit markets, with the impact on EM financing conditions exacerbated by the sharp rise in foreign-currency-denominated debt over the past decade, the vast majority of which is denominated in US dollars.

Non-bank foreign-currency debt has risen by around 180% in emerging markets since end-2006.

More details: https://www.fitchratings.com/site/pr/10047648

Person in charge of the newsline: Olga Nagiyeva 

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