WASHINGTON — The world once heralded the rising economies of India and Brazil, but the prolonged Western economic recession has hit them hard too.
Reuters reports that both India’s rupee and Brazil’s real suffered and plummeted in value against the dollar.
Investors were hedging their bets as far as the impact of limited and the withdrawal of significant foreign capital (primarily U.S. dollars). Now, they know that these currency markets are still reliant on the U.S. dollar.
The U.S. Federal Reserve announced this past May that it will stop printing money and injecting monetary stimulus into the American economy. As a result, it will lead to less foreign capital being invested in countries like India and Brazil. The Indian rupee lost 13% against the dollar while the Brazilian real lost 15%.
It does not seem that anything can stem the tide except for an American economic recovery and increased monetary stimulus by the Fed Reserve.