Currency rallies ease pressure on central banks

The recent rallies in the Russian ruble and the Turkish lira have added weight to our view that central banks in both countries will refrain from tightening policy further when they meet next week. Meanwhile, data that slipped under the radar this week showed that Romania’s current account deficit widened to 4% of GDP, reinforcing our concerns that excessively loose policy is leading to a build-up of imbalances that could be the trigger for a sharp slowdown in economic growth.