Local currency asset purchases by central banks in emerging market economies (EMEs) were deployed for the first time in these countries to respond to the Covid-19 shock. With a multifaceted pandemic shock, leading to a sharp reversal in global risk appetite, collapsing economic activity and global trade and declining commodity prices, quantitative easing (QE) policies in EMEs primarily aimed to (i) compensate for the bond sell-off by foreign investors; (ii) prevent surges in local benchmark bond yields; and (iii) communicate that central banks were ready to purchase their respective sovereign’s assets should the ... (full story)