Steep falls in emerging market currencies have spurred central bankers across the developing world into action to try to stem the weakness. A JPMorgan index tracking 22 emerging market currencies has hit record lows, and with the US Federal Reserve set to raise interest rates this year, more weakness likely lies ahead.
Policymakers in the developing world, faced with sluggish growth and shrinking exports, have so far 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 told clients.
The following is a list of measures emerging central banks have undertaken to limit currency weakness:
NIGERIA: The central bank has directed commercial banks to pay for dollar purchases 48 hours in advance, after banning them from accepting foreign currency cash deposits to curb dollar demand. In June the bank had curbed access to the interbank currency market to preserve foreign reserves.
The naira is at 197 per dollar in the interbank market. It reached 240 in parallel markets and has since risen to 217.
RUSSIA: The central bank has stopped its dollar purchase programme and will not replenish its reserves for the rest of 2015 to reduce pressure on the rouble. On July 31, it cut interest rates by 50 basis points (bps), its fifth cut this year but smaller than its usual instalment of 100 bps. The rouble fell more than 10 percent in July.
BRAZIL: The central bank said it would nearly double the number of currency swaps to roll over expiring contracts to support the real, currently at 12-year lows. The bank raised rates by 50 basis points on July 29 to 14.25 percent and plans to hold them there "for a sufficiently prolonged period"
TURKEY: The central bank may adopt additional forex liquidity measures if currency moves continue to delay the fall in inflation, though it did not say what the measures were. Governor Erdem Basci also signalled a return to more orthodox monetary policy, saying the bank was conducting a technical assessment of the impact of using a single interest rate.
MEXICO: Central bank governor Agustin Carstens has said interest rates can be raised anytime to defend the peso, which is at record lows. The central bank also bolstered interventions, raising daily dollar auctions to $200 million from $52 million.
PERU: The central bank has been selling dollars to stabilise the sol, which is at six-year lows.
SOUTH AFRICA: The Reserve Bank raised interest rates by 25 basis points to 6 percent on July 23, a move viewed as a borderline call. The rand touched 14-year lows against the dollar this month.
MALAYSIA: International reserves have fallen below $100 billion due to central bank intervention to slow ringgit declines, data showed on August 7. The bank has been intervening to support the ringgit which is at 17-year lows against the dollar. Reserves are down $10 billion since end-May and $20 billion this year to five-year lows.
INDONESIA: Indonesian reserves fell in July by almost $500 million, data showed on August 7 and central bank deputy governor Mirza Adityaswara said the level allowed the bank to smoothen rupiah volatility.
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