As the Emerging Markets watch their currencies tumble and theirs stock markets tank, central banks are stepping up.
Here are three headlines out of the EMs in the last 12 hours:
The Reserve Bank Of India Sells Dollars To Oil Companies: In its effort to prop up its collapsing rupee, the RBI said it will enter into USD-INR swaps with state-owned oil-marketing companies.
“The RBI will meet the entire daily dollar requirement of three public sector oil-marketing companies through a sell/buy USD-INR swap for a fixed tenor, thereby removing the largest source of dollar demand from the market,” noted Morgan Stanley’s Hans Redeker.
The Brazilian Central Bank Raises Rates: Late Wednesday, the BCB raised its benchmark interest rate by 50 basis points to 9.00%. In the past four meetings, the BCB has raised this rate by a total of 175 basis points.
“Contrary to our ongoing view, the passthrough inflation pressure due to currency depreciation — although mostly built into our inflation forecasting model — could necessitate a further hike through Q4 and Q1 next year,” said Societe Generale’s Dev Ashish. “This would particularly be the case if the currency remains at depreciated levels for a long enough period of time.”
Bank Indonesia Raises Rates: Thursday morning, BI raised its benchmark interest rate 50 basis points to 7.0%.
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