In August market performance was mixed in the face of burgeoning political uncertainty in Egypt and Syria, and the expectation of a likely start to tapering by the Federal Reserve in September. Both developed market fixed income and equity markets moved lower as the prospect of the Federal Reserve scaling back its bond purchasing program at its 18 September meeting pushed US Treasury yields higher. Emerging market currencies in particular were heavily sold off with significant falls recorded by the Indian Rupee and the Indonesian Rupiah. The substantial declines recorded by some currencies forced a number of policymakers to intervene in their respective foreign exchange markets. Brazil’s central bank announced a USD $60 billion currency intervention program which will provide funding to the foreign exchange market until the end of 2013. This move was followed by a 50 basis point (0.5%) hike in Brazil’s benchmark rate taking it to 9.0%.
