By and large, the monetary trends are within the projections made in the Review. The financial markets generally remained stable. Though there was upward movement in interest rates in money and government securities markets in November, the interest rates have since reverted closer to levels in October 2004. The yield spread between highly rated corporate paper and government securities increased.
Improved fundamentals, abundant reserves and strong growth rates have all helped to sustain flows into emerging market assets. However, there are macroeconomic vulnerabilities in a number of countries that make them susceptible to a deterioration in the external environment – in particular countries with current account deficits financed by private debt or portfolio flows, and countries in which domestic credit has grown rapidly.