Asian Development Bank Confident Asia Can Ride Out Tapering Storm

Asian economies can ride out the storm when the Federal Reserve finally begins ending years of easy money, with even those most at risk, India and Indonesia, holding enough currency reserves for rough times ahead, according to the Asian Development Bank.

The ADB reckoned the U.S. central bank would wait till early 2014 to slow its dollar printing presses, after the Fed surprised markets last month by leaving its $85 billion monthly bond buying program unchanged.

“We are anticipating that is something that would start early next year,” ADB assistant chief economist Joseph Zveglich told a news conference, adding that it was crucial that the Fed communicates its timeline for reducing the stimulus programme.

Updating forecasts for 2013 and 2014, the Manila-based lender said on Wednesday that growth in developing Asia is likely to be slower than it thought three months ago, when it last revised forecasts to an annual outlook released in April.

It now reckons the region, grouping 45 countries in Asia-Pacific, will grow 6.0 percent in 2013 and 6.2 percent in 2014, little changed from last year’s growth of 6.1 percent.

Between May and August, emerging markets were gripped by a sell-off after the Fed signaled that it would taper its bond-buying stimulus once the U.S. economy improved.

The sudden capital outflows caused some alarm, but ADB said worries over potential for a regional meltdown were misplaced.

via Reuters

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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, Alfonso Esparza 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 has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. 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