The retrenchment from emerging market economies resumed in full force around the turn of the year, as their subdued growth outlook continued to diverge from the optimistic sentiment in mature markets and as US monetary policy reduced the flow of easy money. Investors were also unsettled by signs of economic weakening and growing financial risks in China. The upshot was portfolio outflows and declining asset values. In parallel, some emerging market currencies depreciated sharply, prompting authorities to defend them by raising policy rates and intervening in foreign exchange markets.[...]