Emerging market currencies hard hit right now

Some of the biggest casualties of the global financial crisis have been the emerging market currencies. These are currencies from countries like India, Brazil, China and South Korea, Thailand and Vietnam that have up-and-coming economies that rely on global consumption of their exports. As one might imagine, with consumers around the world reducing their spending, it is no surprise that times are getting tough for emerging markets.

Another issue is the high rates of forex reserves in emerging market countries — especially in Asia. The Forex Blog points out how the stinginess of some countries — at the expense of true economic development — has further contributed to current problems:

High savings rates in Asia, for example, enabled western countries to run continuous current account deficits. Now, the chickens are coming home to roost, and developing economies are once again finding themselves vulnerable to recession, since their forex reserve policies came at the expense of developing domestic economic bases.

Add to that the current risk aversion, and the notoriously risky emerging market Asian currencies have yet another issue to contend with.

See Also

• Asian Currencies in Forex Trading
  World currencies on the FX market