Last week’s surprise decision by the US Fed to delay tapering of its QE programme provided an immediate boost to currencies and equity markets across Asia, including those in two of the region’s most troubled economies, India and Indonesia. The Reserve Bank of India even took advantage of the improvement in sentiment to roll back some of the liquidity tightening measures that it introduced in an attempt to support the rupee in July. However, both the rupee and the rupiah have fallen back over the past couple of days. Uncertainty over the outlook for Fed policy suggests that Asian markets are likely to remain volatile over the next couple of months. Deep structural problems in both India and Indonesia mean the rupee and rupiah are likely to bear the brunt of any further sell-offs.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services