That contrasts with policy in South Africa, where the currency floats freely and the central bank didn’t take action during bouts of currency weakness in the past two decades. The worst quarterly economic contraction in nine years suggests it won’t tighten anytime soon, according to Brown Brothers Harriman & Co.
It would be hard for some countries such as South Africa and Brazil to raise rates like Indonesia and Turkey because of their economic conditions, SBI’s Soma said. “If those countries do, it would put them in a vicious cycle,” he said.
This article was provided by Bloomberg News.