It is probably too early to assess whether the current volatility we are observing in the international currency markets is the beginning of this adjustment process, or to predict how this process will unfold.
Until May this year, emerging markets had enjoyed an extended period of investor exuberance and search for higher yield, which, combined with a generally supportive environment of strong global growth and high commodity prices, caused emerging market currencies to appreciate, equity prices to increase and bond spreads to narrow.