Investors also appear more sanguine about the US Federal Reserve's plan to steadily withdraw monetary stimulus.
But the next stress points are already emerging.
Some investors are bracing for the "April tipping point", when the Fed's stimulus withdrawal is expected to start having a more material impact.
"Another catalyst will be political uncertainty, with many of the deficit countries facing elections in 2014," said
That includes the capital-hungry "Fragile Five" countries, in which elections are due this year.
"Markets don't like uncertainty and there is a lot of political uncertainty out there," said Chadda, who expects pressure on emerging markets to return as the Fed scales back its asset-purchases this year.
And if turbulence has ebbed in markets such as
For instance, markets in
The naira has hit two-year lows after President
A weaker currency worsens the inflation outlook for
The cedi currency of another African commodity exporter,
Reserves fell in 11 out of 17 key emerging economies, including
That in turn undermines the ability of central banks to support currencies under pressure.
"Is the crisis over? It's not. Real exchange rates of emerging markets have to come down further," Howell said.
"Which banana skin are you going to slip on? I believe it would be weak economic data coming out of
He noted that
"The shining lesson from the 1930s is that those countries that devalued currencies first got out quickly. (
The Fed's winding-down stimulus, which began in December, has so far not significantly driven up US bond yields, which remain below levels seen in May-June last year.
But it may simply be that the real effect of tapering has not kicked in yet, because as the economy recovers and the US budget deficit shrinks, the Treasury is issuing less debt.
"The Fed's tapering will only catch up to the Treasury's tapering by April or so," Jen said. "This may help explain why equity prices have been so well supported in Q4 2013 and early 2014, despite the Fed's decision to taper." - Reuters
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