India, Indonesia Can’t Afford To Delay Fiscal Adjustments

When the Fed initially floated the idea of tapering, the impact on emerging markets was more than anyone would have predicted, with a huge August sell-off and weakening currencies in EM Asia. In September, all of those currencies bounced back to some extent as investors took a second look at potential EM growth, but the Indian rupee and Indonesian rupiah have continued to lag. As Deutsche Bank analyst Taimur Baig explains, now is no time for those countries’ leaders to relax.

India and Indonesia deficit financing

“For EM Asia, the postponement of the taper brings welcome respite, especially for its...