South Africa is a classic example of a country with such an exposure, and it is precisely for this reason that the South  2  BIS Review 108/2007  African Reserve Bank has used the opportunity of increased flows to emerging markets to strengthen its foreign reserves position.
These developments have complicated the formulation and implementation of monetary policy by central banks, in particular in emerging markets. Globalisation of financial markets has to some extent blurred the conventional ways in which markets react to monetary policy. As a result, the extent and direction of changes in asset prices in response to changes in monetary policy are becoming increasingly uncertain.