Asset prices have fallen considerably more in economies with large current account deficits, high inflation, and fiscal problems than in countries with stronger fundamentals. For example, as shown in chart 9, changes in EME exchange rates and interest rates since April have been correlated with current account deficits.
In general, economies with larger current account deficits experienced greater depreciations of their currencies and larger increases in their bond yields. Thus, while a reassessment of U.S. monetary policy may have triggered the recent retrenchment from EMEs, investor concerns about underlying vulnerabilities appear to have amplified the reaction. 12  See IMF (2013a).