India, Brazil, Other Emerging Economies Hit by Currency Rout !

• India, Brazil, other emerging economies hit by currency rout! 
  by Reuters, via http://timesofindia.indiatimes.com/ 
  MUMBAI/RIO DE JANEIRO: The  Indian rupee plummeted to a record low against the dollar on Monday, leading a rout by Brazil’s real and other emerging market currencies seen by investors as the most vulnerable to an exodus of foreign capital.
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  A fierce selloff in many emerging currencies shows no sign of abating as the expected withdrawal of U.S. monetary stimulus prompts investors to shun markets seen as riskier because of  funding deficits, slowing economies and inflation.
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  The rupee fits that bill, as do the Indonesian rupiah, the South African rand and the Brazilian real. The rupiah plunged to four-year troughs on Monday while the rand lost another 1 per cent to bring year-to-date losses to almost 17 per cent against the dollar.
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  Brazil’s real extended last week’s fall of more than 5 per cent fall to trade at its weakest level since March 2009 even as the central bank sold nearly $3 billion worth of currency swaps, which are derivatives that mimic an injection of dollars in the futures market. Like the rupee, it has been hammered by doubts over the efficacy of policy actions to stem the rout.
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  The rupee and the real, respectively, have been the worst performers in Asia and  Latin America since late May when the Fed first signalled that it may begin winding down its monetary stimulus this year. India’s currency has lost 13 per cent against the dollar this year while the real has plunged 15 per cent in the same period.
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  A decline in the Fed’s bond purchases will push government debt yields higher, which should raise the attractiveness of the dollar and dollar-denominated assets.
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  In Brazil, the currency weakness has complicated policymakers’ efforts to rein in  inflation, leading many investors to bet the central bank may speed up the pace of monetary tightening next week.
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  In India, the rupee’s sell-off threatens to drive Asia’s third-largest  economy towards a full-blown crisis.
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  “Our primary concern is that the policy authorities still don’t ‘get it’ – thinking this is a fairly minor squall which will simmer down relatively quickly with fairly minor actions,” Robert Prior-Wandesforde, an economist at  Credit Suisse in Singapore, wrote in a note on the Indian currency on Monday.
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