Currency traders are rejecting warnings from
After peaking at a four-month high earlier this month, a measure of anticipated global price swings has fallen back to the lowest level since October, seven weeks before the US central bank announced a cut in its bond purchases.
Average implied volatility for the currencies of
Lagarde said in an interview after the Group of 20 (G20) meeting at the weekend that increased volatility would be a "spillover" of the Fed's actions.
"A jump in volatility starting from emerging markets is unlikely as long as the recovery in developed economies continues,"
"Once developed markets stabilise, global markets stabilise. And that's a positive for emerging economies."
While the worst winter storms to hit the US in 31 years have depressed retail sales and employment growth, economists surveyed by
The JPMorgan Chase Global FX volatility index fell to 7.63 percent as of
Traders' expectations for future swings in the currencies of the fragile five averaged |12.3 percent, down from more than 17 percent in August. Volatility on these currencies was at a record low 8.22 percent in May, before then-Fed chairman
"A major driver of the spike in volatility was the shock factor,"
Investors fled emerging market assets as the start of Fed tapering coincided with reports confirming a slowdown in
The gauge has rebounded 2.1 percent from its
"The rout in emerging markets was a temporary phenomenon,"
Stocks rallied this month, with the Standard & Poor's 500 index of US equities closing on Monday less than one point from its record high of 1848.38, and the global
The official communiquÉ promised to be mindful of international repercussions of monetary policy, after countries including
Yellen pledged on
"The tapering that we see is a result of the significant improvement of the global economy, but particularly the US economy, and that in and of itself is positive," Lagarde said.
"There will continue to be volatility on the markets as a result of this tapering." -
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