Currency values and foreign exchange rates change for many reasons, largely following market perceptions, regardless of fundamentals. Market speculation has worsened volatility, instability and fragility in most economies, especially of small, open, developing countries. US Fed pushing up interest rates For no analytical rhyme or reason, US Federal Reserve Bank (Fed) chairman
Tag: developing countries
Developing countries need monetary financing
Developing countries have long been told to avoid borrowing from central banks (CBs) to finance government spending. Many have even legislated against CB financing of fiscal expenditure. Central bank fiscal financing Such laws are supposedly needed to curb inflation – below 5%, if not 2% – to accelerate growth. These arrangements have
1980s’ Redux? New context, Old Threats
As rich countries raise interest rates in double-edged efforts to address inflation, developing countries are struggling to cope with slowdowns, inflation, higher interest rates and other costs, plus growing debt distress. Rich countries’ interest rate hikes have triggered capital outflows, currency depreciations and higher debt servicing costs. Developing country woes have
