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 exchange rates.
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.
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Following is a list of countries that have raised rates or are expected to do so in the face of an accelerating exodus of foreign investors:
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 April.
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)
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