Summers as Head of the Fed Could Spell Risk for Emerging Markets

Thought speculation about Federal Reserve tapering was bad for emerging markets? Then just wait to see what happens if Larry Summers is appointed as the next U.S. central bank chief, analysts say.

They argue that if Summers replaces Ben Bernanke, whose second term as Fed chairman expires in January, any scaling back in the central bank's asset-purchase program would be ramped up by the hawkish Summers and deal a further blow to battered emerging markets.

Paul Krake, founder of the consultancy View from the Peak: Macro Strategies, said that it isn't when the Fed starts to take back its massive monetary stimulus but who takes over as Fed chairman next year, that's important to markets right now.

"The U.S. president is a pretty important job; but ask the Indians, the Indonesians, the Brazilians who's had more influence over their lives and the answer would be the Fed chief," he told CNBC.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, he established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza