The Peruvian banking system will remain relatively resilient to the the impact of the U.S. Federal Reserve's tapering program, according to analysis by Standard and Poor's
The New York-based credit ratings agency examined seven countries including Brasil, Chile, India, Peru, South Africa, Indonesia and Turkey to get a better understanding of how the tapering conducted by the FED could affect banking systems in emerging markets.
In its latest report titled "Which Emerging Market Banking Systems Could Suffer Most From Fed Tapering?", S&P found banking systems in Turkey and South Africa are the most vulnerable to tapering's impact.
"However, we expect banking systems in Chile, India, Indonesia, and Peru to show relatively higher resilience to tapering's impacts"
With regard to the Brazilian banking system, the ratings agency noted that it is likely to continue feeling the indirect impact through a worsening of the U.S.'s economic slowdown.
Likewise, the study explains that banking systems can feel the impact of tapering directly through more limited access to external funding or through increasing costs to refinance external debt.
"They can also feel it indirectly through possible central bank interest rate increases, due to currency depreciation and lower capital inflows through the financial account of their balance of payments, which may weigh on economic growth," it added.
(END) JJN/AQR/DLG/LOG
Published: 4/16/2014