WASHINGTON, January 15 (Sputnik) — Russia, along with Venezuela and Nigeria, is experiencing significant currency pressures because of oil prices decline, and this can have a notable impact on the whole region, Managing Director of International Monetary Fund Christine Lagarde said Thursday.
“There are significant risks to [global] recovery,” Lagarde said during a speech at Council on Foreign Relations. “The oil price drop – and weaker commodity prices more generally – have added to these risks, with some countries such as Nigeria, Russia, and Venezuela facing huge currency pressures. Given the size of these economies, the recent developments could also have significant regional effects.”
“A stronger dollar will have a significant impact on financial systems in emerging markets, because many banks and companies have increased their borrowing in dollars over the past five years,” Lagarde explained.
She added that at the moment there is a need for a powerful policy mix that could strengthen the recovery and provide better employment perspectives for people worldwide.
According to IMF, overall weak global growth can be explained by the asynchronous normalization of monetary policies in advanced economies, low growth and low inflation in the Euro Area and Japan, increased geopolitical risks and oil price drop.
Since June 2014 the oil price has fallen by more than 40 percent and now is at a point of less than $50 a barrel. The Organization of Petroleum Exporting Countries failed to agree on production curbs during a November meeting, and prices continued to fall.
