Some emerging economies have suffered instability in their financial markets, such as a plunge in stock prices and depreciation of currencies. A number of factors have been cited as the background.
Examples include global investors’ renewed focus on the vulnerable economic structure of these countries as seen in current account deficits amid waning strong growth expectations, speculation on monetary policy conduct in advanced economies, and intensified risk aversion. Such movements in financial markets entail risks that the real economies of these countries will be affected by tightened financial conditions and worsened business and household sentiment.