In fact, QE had a negative influence on the emerging countries, JP Morgan analysts commented on Wednesday. First, these countries suffered from inflationary pressures (since the QE made inflation go up in US) and saw their current account deficits worsen (because the QE devalued the dollar and made the other countries’ current account balance worsen), forcing them to apply unwanted monetary tightening policies.
The proof could be that today we see that the EM are trading at lower levels vs DM than it did before the start of the QE1. Therefore, JPMorgan believes that the end of QE will be more beneficial than expected for emerging markets.
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