Economic data shows that the world’s leading economy is improving and several economists believe it is ready for a cutback in monetary stimulus. However, critics say that this could lead to a detrimental knock-on effect for emerging markets.
A cutback in QE would raise bond yields in the US, which in turn would raise eurozone rates and suck out money from emerging markets. A sudden withdrawal of foreign funds from emerging markets could also be catastrophic, which has happened before, during the Asian and Russian financial crisis of 1997 and 1998 respectively.
– by M Rochan, International Business Times
July 18, 2013 10:14 AM GMT