Fed Casts Shadow Over India, Emerging Narkets

The US Federal Reserve has signaled intentions to reduce a huge bond-buying program that has pumped the US economy with stimulus funding. This in turn is prompting currency values to fall in emerging economies. Speculating that US interest rates may rise, investors are pulling money away from foreign investments in favor of US bonds. As a result, the rupee has fallen to a historic low in relation to the US dollar. Decline in currency values is matched by a sharp decline for businesses in India, South Africa and Brazil. “In a bid to stem the rupee's fall, India's Reserve Bank over the past few weeks has introduced higher import duties on gold and silver and restricted the amount that local companies can invest overseas without seeking approval,” reports Mandakini Gahlot for USA Today. Analysts are divided over how much of the concern is panic or legitimate, how quickly the currencies may recover or how much control other central banks might have. – YaleGlobal