Emerging-market central banks are losing battle against traders

Bloomberg

Central banks in emerging economies are losing the battle with markets as their efforts to shield their currencies struggle for traction, suggesting policy makers have more work to do.
Rising US interest rates, the strong dollar, higher oil prices, China’s market and economic wobbles and fears of a global trade war are conspiring to pressure emerging-market currencies. Here’s a look at how markets have responded to recent central bank moves:

INDONESIA
Bank Indonesia decided to proceed with a third increase in six weeks with a more-than-expected 50 basis points. It delivered two rate hikes in a fortnight in May, but currency has come under pressure amid escalating US and China trade row, falling to the weakest since October 2015.

PHILIPPINES
The Philippine peso has hit its weakest level against the dollar in 12 years, even after the central bank raised the policy rate for the second consecutive meeting to 3.5 percent. Analysts are saying more increases are needed to support the beleaguered currency as the central bank forecasts inflation this year to reach 4.5 percent.

INDIA
The Indian rupee slumped to an all-time low as a resurgence in crude oil prices and the emerging market selloff took a toll on the currency. The nation imports about three quarters of its oil, threatening inflation and worsening the trade deficit.

MALAYSIA
Malaysia’s ringgit declined after Bank Negara boosted policy rate on Jan 25 for first time since 2014. In recent months, ringgit racked up losses amid uncertainty over government policies. BRAZIL
Pressure is rising on Brazil’s central bank to raise rates after the real weakened more than 10 percent this year and a nationwide trucker strike caused shortages and higher prices of food and fuels.

MEXICO
Mexico’s central bank increased rates last week. The bank may extend its monetary tightening cycle in the near future as it confronts a number of risks to inflation, including political uncertainty related to the upcoming presidential election, concerns about the future of the North America Free Trade Agreement, and growing emerging-market turbulence.

ARGENTINA
Argentina’s central bank raised its benchmark rate to 40 percent early in May to support the currency amid the emerging-market rout. The aggressive monetary tightening has been insufficient to stem the peso’s decline.

CHINA
China’s currency has fallen more than 3 percent against the dollar since the middle of the month as a raft of economic data came in below expectations.