What emerging market central banks can do to protect their currencies

Emerging market central banks are becoming increasingly sensitive to currency depreciation and several have sold down a significant portion of their foreign exchange reserves to slow the pace of decline. Most EMs have sufficient reserves to avoid old fashioned crises, but additional pressure on currencies could see some take more aggressive action to prevent further depreciation.

Read: The ornithology of monetary policy FX reserves are not a bottomless pit, meaning that while most EMs have plenty of assets to avoid an old fashioned balance of payments crisis, at some point direct intervention in currency markets becomes unsustainable if reserves become insufficient to cover external obligations.

Brasil Últimas Notícias, Brasil Manchetes