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In response to the Coronavirus panic effect on world economies the t IMF issued a statement Monday that it's ready to mobilize $1 trillion loan capacity to fight the virus. This is crucial where emerging markets unable to tap debt markets,

The International Monetary Fund (IMF)

IMF Chief Georgieva:

  • The case for coordinated and sychronized global fiscal stimulus is becoming stronger by the hour.
  • Additional stimulus will be necessary to prevent long-lasting economic damage
  • Has received interest from about 20 more countries for ongoing loan programs, in addition to 40 existing programs
  • Central bank swap lines to emerging markets may be needed FX interventions and capital flow management measures can usefully complement other monetary policy actions
  • Banks should use capital and liquidity buffers

 

The International Monetary Fund (IMF)   had previously said the dollar's appreciation in recent years was based on its relatively stronger growth outlook, its monetary policy divergence from the eurozone and Japan well as expectations for further fiscal stimulus from the Trump administration. They warned on America's massive budget deficit.

"It's important to address imbalances, because if they're not dealt with appropriately and through the right policies, we could have a backlash in the form of protectionism. That is, prices, savings and investment decisions don't seem to be adjusting fast enough to correct imbalances. This partly reflects rigid currency arrangements, but also certain structural features, like inadequate safety nets, barriers to investment, which leads to undesirable levels of savings and investment," IMF Research Division Chief Luis Cubeddu told a news conference.

ISo here we arre, the relevance with the USD is most of these countries debt is demoninated in US dollars, With the collapse of many emeging cou nations curriences with huge debt such as Argentina and Braizil the pain depens, We have also seen similar  moves in the Mexican Peso in the past while/

MXN W 3 13 2020

Another market hit is Turkey;

TRY W 3 13 2020

 

Source: IMF, Reuters

From The TradersCommunity News Desk

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