'EM Currencies Are at Central Banks’ Mercy as Fiscal Policy Lags'

 

• Debt-to-GDP levels are rising across key EM economies: IMF
• Central banks can’t sustainably defend currencies: Wells Fargo

Emerging-market central banks are becoming the first line of defense to shield local currencies pummeled by speculative attacks and fiscal shortfalls.

The latest bout of intervention from Latin American central banks in the currency market shows their tug of war with hot money is likely to persist until governments rein in spending. Over in Asia, the People’s Bank of China is enlisting more tools to defend the yuan as disappointing fiscal stimulus so far in the face of anemic growth and US tariff threats weaken the currency.

https://www.bloomberg.com/news/articles/2025-01-12/em-currencies-are-at-central-banks-mercy-as-fiscal-policy-lags