WASHINGTON Jan 28 The volatility in world
markets is being caused by problems in particular developing
countries and not linked to the U.S. Federal Reserve's decision
to reduce its monetary stimulus, the International Monetary
Fund's top financial counselor said.
Large capital outflows from developing markets in the past
few days have caused market jitters, with currencies in Turkey,
Argentina and Russia hitting record lows. Many investors have
blamed the moves on the withdrawal of U.S. monetary stimulus.
"We are seeing that the events in the past few days ... the
major component has to do with problems in a subset of emerging
market countries," Jose Vinals, financial counselor and director
of the IMF's monetary and capital markets department, told
reporters on Tuesday.
"This is something where the U.S. monetary policy tapering
expectations have so far not played an important role," he said.
Vinals said that the U.S. central bank was acting prudently
in starting to reduce its monthly bond buying program,
consistent with improvements in U.S. economic data.
He said the chance of a smooth exit from the Fed's so-called
"quantitative easing" had in fact increased since October
because of the Fed's improved communication. The U.S. central
bank has convinced markets that reducing monthly bond purchases
was not equivalent to raising rates.
And for central banks in emerging markets, Vinals said it
was important to maintain independence in order to keep
inflation under control and retain credibility.
Vinals' comments came just before Turkey's central bank
decided to sharply raise all of its main interest rates to stem
a slide in the lira, despite the opposition of Turkish Prime
Minister Tayyip Erdogan.