What Happens in EM Stays in EM Says Goldman

January 30, 2014 Share Print 0

The latest selloff in emerging markets may have spurred fears of a contagion to developed markets, but what happens in emerging markets mostly stays in emerging markets, Goldman Sachs said.

“Periodic spillovers from portfolio adjustments are more likely to lead to short-lived pressures – as volatility breeds volatility – than longer-lasting ones,” Goldman said in a note. “We view the recent declines as an over-reaction,” it added.

In the wake of the Federal Reserve’s decision Wednesday to further taper its asset-purchase program, U.S. and Asian equity markets fell sharply, extending recent losses.

Asian currencies headed back toward recent lows against the dollar and the Turkish lira slipped 0.2 percent to 2.26 to the dollar, after strengthening Wednesday on a sharp hike in Turkish interest rates a day earlier.

via CNBC

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Alfonso Esparza

Senior Currency Analyst at Market Pulse

Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.