Read the short article drawn from The Economist. What is the impact of currency on corporate industry, especially in the emerging marketplace?
Currency and Strategy
It is clear that emerging markets have been affected by the “tapering” carried out in the United States. Ben Bernanke, the outgoing Fed. Chairman, stated that America had tapered bond-buying. Argentina witnessed this, as have other markets: since January 22nd, the Argentine peso has fallen by 14 percent. Turkey, South Africa, and India among others are trying, each in their own way, to handle this crisis as their currency is weakened against the American dollar. A sizable loss in the value of a nation’s currency of 10 percent to 20 percent is difficult to manage, especially as each emerging country has its own political and economic headache. Argentina is using up its international reserves to prop up its peso. South Africa and Turkey have gaping current account deficits whereas Ukraine and Thailand have internal political discontent. Furthermore, Brazil is susceptible to China’s economic slowdown. When markets start falling, there tends to be a domino effect