Investors Withdraw Money From Emerging Markets Amid Unstable Situation

The emerging market currencies are dramatically losing their value against the dollar due to the ongoing capital outflow.

The trend reached a critical level: over the last 13 months nearly one trillion dollars was withdrawn from countries with emerging economies, DWN reported.

This negative trend arises from the fact that local investors, companies and financial institutions are shifting their money abroad and thereby contribute to the devaluation of the currencies.

According to the newspaper, investors fear an imminent interest rate increase by the US Federal Reserve as well as further price falls on China's stock exchanges.

Emerging economies have been suffering from slow growth and a devaluation of their currencies for a significant period of time. The continuing withdrawal of capital reinforces the doubt about whether the emerging markets will be able to regain their former status as a locomotive of the global economy.

Taking into account the recent devaluation of the Chinese yuan, analysts expect even further capital outflows.

Over the last 13 months, the net capital outflow from the 19 largest emerging economies reached about $940.2 billion, as the FT reported. Thus, the number was almost twice as high as during the last financial crisis, when $480 billion had been withdrawn from the emerging markets within nine months between 2008 and 2009.