Emerging economies raise interest rates to defend currencies

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Banks in India, Turkey, and South Africa are raising their interest rates in order to defend their currencies. The reasoning behind these spikes is to support their currencies which have suffered due to the stir of recent turmoil engrossing developing markets. Analysts are skeptical that the higher interest rates won’t be enough to branch the instability stemming from these markets. A global macro strategist, Neil MacKinnon, said the using interest rates to defend a currency in the past “usually ends in tears.”

 

 

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