Further, the European Central Bank’s indication to keep interest rate lower to spur economic activity has also added to market comfort. Consequently, the downtrend in yield rates in US bond market have led investors again to embrace EME equity and bond markets in search of higher yields. Second, various policy measures helped improve domestic fundamentals.
For instance, with sharp reduction in CAD, external financing requirement has reduced, resulting in accretion to foreign exchange reserves thus improving various external sector vulnerability indicators (Table 2).