Dollar Relief for the Global South
The Fed’s dramatic interest-rate hikes have had dire implications for debt sustainability in the developing world. But the collapse of Silicon Valley Bank could lead to a rebalancing of monetary policy and, ultimately, a weaker US currency, which would go a long way toward easing financial conditions in low-income countries.
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CAIRO – The US Federal Reserve’s decision to raise interest rates by 475 basis points over the course of 12 months, in a bid to curb inflation, was bound to be perilous. As should have been expected, it precipitated a dramatic shift in yield curves and exposed vulnerable financial institutions to interest-rate risks.