LONDON Feb 4 Central banks in emerging markets
are under growing pressure to raise interest rates, to support
their currencies and head off inflation caused by weaker
Some countries, such as Brazil and Indonesia, were already
poised to hike rates. Markets may force others, such as Hungary
or Thailand, into reversing hitherto dovish policies.
For a report on possible further policy tightening in
emerging markets, please click on
For an interactive map on emerging market currencies: here
Following is a list of countries that have raised rates or
are expected to do so in the face of an accelerating exodus of
TURKEY - raised all its interest rates on Jan. 29: the
overnight lending rate to 12 percent from 7.75 percent, the
one-week repo rate to 10 percent from 4.5 percent, and the
overnight borrowing rate to 8 percent from 3.5 percent. The bank
has said it may tighten further if necessary.
SOUTH AFRICA - raised rates for the first time in almost six
years on Jan. 30, increasing the repo rate by 50 bps to 5.50
percent. The South African Reserve Bank said the move was aimed
at taming inflation rather than defending the exchange rate.
. Markets are pricing in more than 150 bps of
hikes over the next six months.
INDIA - surprised markets by raising rates 25 bps on Jan. 28
to 8 percent, to dampen inflation and prepare for the risk of
major capital outflows.
BRAZIL - raised rates by a bigger-than-expected 50 bps to
10.50 percent on Jan. 15. The central bank has signalled it may
not be ready to slow an aggressive rate-hike cycle because of
stubbornly high inflation. It has raised rates 325 bps since
NIGERIA - lifted cash reserve requirements on public sector
deposits held by banks on Jan. 21 by 25 bps to 75 percent,
reflecting concern about naira weakness. The naira has been
trading above the target 150-160 per dollar band. Analysts
expect rates to rise 100 bps later this year.
INDONESIA - kept rates steady on Jan. 9 at 7.50 percent but
pledged vigilance over capital outflow risks. The central bank
has raised rates by 175 bps since last June and is expected to
do so again this year.
THAILAND - kept rates on hold on Jan. 22, when most analysts
had expected a cut to follow a 25-bps easing in November. The
central bank voted 4-3 to keep the rate at 2.25 percent,
reflecting its worry that the country's political crisis could
trigger capital outflows.
HUNGARY - surprised markets by cutting rates to a record low
of 2.85 percent on Jan. 21. But recent forint
weakness has caused interest rate markets to price in rate hikes
of more than 150 bps in the next 12 months. Expectations two
months ago were for little change.
RUSSIA - is estimated to have spent $10 billion in currency
interventions but could be forced into policy tightening if the
rouble - down 5 percent already this year - falls much further.
That could to trigger a run on banks. The rouble slide will also
complicate the inflation picture and the central bank's plans to
bring inflation down to 5 percent this year.
MEXICO - held rates steady at 3.5 percent on Jan. 31 but
warned that peso depreciation may affect inflation, which is
already above the central bank's 4 percent upper limit. Governor
Agustin Carstens said the central bank was weighing whether
monetary policy needed adjusting.
GHANA - released $20 million into the interbank market last
week to stabilise the cedi, Bank of Ghana officials said. As of
Jan. 6, the central bank requires all commercial banks "to
actively" quote a two-way pricing of currency exchange and limit
spreads on corporate transactions to a maximum 200 bps.
MAURITIUS - central bank governor Rundheersing Bheenick said
the country needed to raise its 4.65 percent interest rate to
prevent capital flight
ROMANIA - cut interest rates to a record low 3.5 percent on
Feb. 4, but the move marks the end of a 175-bps rate-cut cycle,
analysts said. Governor Mugur Isarescu said volatile capital
flows were a risk to the inflation outlook
(Compiled by Sujata Rao; Editing by Larry King)