Steep falls in emerging market currencies have jolted central bankers across the developing world into action to try and stem the weakness. A J.P. Morgan index tracking 22 emerging market currencies traded at a record low 71.3 on Friday, and with the US Federal Reserve effectively confirming it is on track for a rate rise this year, more weakness likely lies ahead.
Policymakers in the developing world, faced with sluggish growth and shrinking exports, have been relatively sanguine about currency weakness. But many now appear keen to prevent volatile swings or excessive declines that could exacerbate inflation. "Central bankers in emerging markets are finally waking up to the fact their currencies may test extreme levels over the next months, and they are starting to react to it," Citi strategist Luis Costa said, citing policy changes this week in Brazil, Russia and Turkey.
"It is a synchronised protective move among EM central banks, and there will likely be a lot more." The following is a list of measures emerging central banks have undertaken in July to limit currency weakness: