The abrupt and simultaneous withdrawal of the Asian Central Banks out of the U.S. financial instruments may lead to destabilization in foreign exchange markets and a hard landing within the U.S. The second order effects of a recessionary U.S. economy on the rest of the world, particularly the emerging markets are not likely to be pleasant.
With regard to oil prices, non-oil producing emerging market countries will have to watch the movements in oil prices and they are likely to forego some buoyancy if the prices continued to remain tight in the foreseeable future. The volatility in oil markets and the risk premia prevailing do not permit us at this stage to make any helpful prognosis.