According to Bloomberg, a jump in oil prices to $100 per barrel will not allow emerging markets to see a slowdown in inflation and a cut in the key interest rate.
Such a situation may spur a slump in the assets of emerging markets, analysts warn. Jon Harrison, managing director for emerging-market macro strategy at TS Lombard in London, supposes that rising oil prices will prevent inflation in emerging economies from further slackening.
Currency strategists at Tellimer think that economies that depend on the import of hydrocarbons, such as India, the Philippines, and Pakistan, will be damaged more than others. More expensive oil contributes to increased inflation and budget deficits in EM countries. This will be a reason for the weakening of national currencies and the growth of bond yields.
Analysts at Nomura assume that surging oil prices have the most negative effect on India. The country's economy may face a slump. Against this backdrop, regulators in developing countries may postpone monetary policy loosening. This decision may cause lower GDP growth and have a negative influence on the global economy.