The US Fed QE tapering and its potential consequences have kept the global markets busy over the last 2 weeks. If the US Fed QE taper continues on its planned path, we may see higher interest rates in the USA by July 2014 along with US Dollar appreciating against other currencies of the emerging markets.

It will be a very challenging task for the Emerging Markets (EMs) to keep their currencies stable in the face of QE tapering, because its difficult to estimate just how many billions USD will move back from emerging markets back to developed markets like USA in this process.

Countries like India may be forced to raise interest rates to control inflation and keep the currency stable, even though it will further hurt the domestic economy of India, and put downward pressure on Indian GDP growth. Continue reading Market Analysis Feb2014 →