As I noted earlier, GDP growth in many EMEs has fallen from the pace of previous years, which may have led investors to rethink their investment choices. Additionally, it appears that the retreat from emerging markets reflected a change in global risk sentiment, as investors focused on vulnerabilities in EMEs following a period of complacency.
The Bank’s policy is to intervene only when the exchange rate is at exceptional levels; when it is unjustified by medium term economic fundamentals; when intervention is seen as consistent with the Policy Targets Agreement; and when market conditions make intervention opportune.