Knowledge Base
Assess the risks associated with emerging markets
Which key indicator is used to measure equity volatility, credit spreads, and liquidity risks in emerging markets?
The RORO (Risk-On Risk-Off) index developed by the IMF is specifically mentioned as a tool for measuring these aspects. It identifies market phases favourable or unfavourable to emerging markets, which is crucial for assessing associated risks.
What was the main identified cause of the 2018 Turkish crisis?
The 2018 Turkish crisis was primarily caused by President Erdogan's intervention preventing the central bank from raising rates despite 16% inflation. This led to a 35% loss in the value of the Turkish lira in just 47 days.
What is the maximum score on the Dincer-Eichengreen scale for measuring central bank transparency?
The central bank transparency score on the Dincer-Eichengreen scale ranges from 0 to 15. This score measures the quality of central bank communication, which is crucial for assessing their credibility and ability to manage risks.
What is the critical debt-to-GDP ratio that contributed to the 2019-2020 Argentine crisis?
The Argentine crisis was marked by an unsustainable debt-to-GDP ratio, with foreign exchange reserves insufficient relative to external debt. Sovereign spreads had widened by 1,100 basis points, which is a key crisis indicator.
Sub-Saharan African countries are identified as having low financial crisis risk by the IMF in 2024.
The IMF identifies 13 sub-Saharan African countries as being at 'high financial crisis risk' in 2024. This indicates heightened vulnerability in these countries, requiring in-depth risk assessment.
RORO index
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The RORO (Risk-On Risk-Off) index is a tool developed by the IMF to measure equity volatility, credit spreads, and liquidity risks. It identifies market phases favourable or unfavourable to emerging markets.
Net capital inflows into emerging markets (excluding China) reached their highest level since 2018 in 2023.
According to recent IMF data, net capital inflows into emerging markets (excluding China) reached $110 billion in 2023, the highest level since 2018. This indicates increased resilience of these markets.
Categorize items by dragging them to the appropriate zones
Items to categorize:
Currency risk
Political risk
Liquidity risk
The indicators mentioned can be classified into different risk types, such as currency risk, political risk, and liquidity risk. This categorisation helps understand how these indicators contribute to the overall risk assessment.