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Pandemic import compression changed emerging market current accounts and the exchange rates consistent with external balance. The July 2020 valuation update identified the Brazilian real as the most undervalued emerging market currency and the South African rand as close to fair value. Turkey’s prospective return to a substantial current account deficit, by contrast, pushed the lira into overvaluation in the assessment.
Read the workJonathan Fortun’s July 2020 tracker estimated emerging market portfolio inflows of $32.9 billion in June, as flows continued to recover. Debt attracted $23.5 billion, compared with $9.5 billion for equities, while equity flows outside China posted only marginal gains. The composition shows that the aggregate recovery was stronger in debt than in equities and remained uneven across markets.
Read the workEmerging market activity was still contracting as early signs of recovery appeared in June 2020. Jonathan Fortun contrasts deteriorating hard data with purchasing managers’ surveys suggesting that the pandemic downturn had bottomed. Asia was the only regional tracker with positive readings, while the effects on trade remained uncertain.
Read the workTracking fiscal deterioration during the pandemic required more timely information than annual budget figures. Jonathan Fortun and Sergi Lanau introduce tools for frequent monitoring of emerging market deficits. Their June 2020 assessment finds widening deficits through April, led by rising spending excluding interest, with Brazil and Hungary showing the largest deterioration.
Read the workThe paper examines how central-bank digital currencies and private digital-money initiatives could change banking intermediation and monetary-policy arrangements.
Read the workRemittances could offer less protection during a synchronized global shock than during a local downturn. Benjamin Hilgenstock, Elina Ribakova and Jonathan Fortun examine early 2020 evidence of slowing transfers as other foreign flows weakened. Their June assessment identifies Central America, the Caribbean, the Philippines and Egypt as particularly exposed.
Read the workThe return of portfolio investment to emerging markets remained tentative in May 2020. Jonathan Fortun reports $4.1 billion in overall inflows, with debt carrying most of the recovery. Equity investment outside China remained depressed, limiting the breadth of the rebound after the pandemic shock.
Read the workThe March 2020 capital flight hit emerging markets unevenly. Jonathan Fortun and Robin Brooks use newly available monthly balance of payments data to compare nonresident portfolio outflows against each country’s usual volatility. Brazil and India stand out among the hardest hit, while eastern European markets including Poland experienced less severe disruption.
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