Most fund houses have reduced their exposure to emerging equity markets and increased their exposure to developed equity markets, Robert Parker of Credit Suisse said in an exclusive interview to CNBC-TV18. Interest rates in emerging markets, he added, will rise further.
The rupee weakened on Friday tracking choppy domestic shares and the euro's drop against the dollar, and is expected to move in a narrow band with most Asian markets closed for the Lunar New Year holiday.
The European Central Bank kept interest rates at 1% as forecast on Thursday, ahead of its policy statement where it is expected to repeat its recent inflation warning but signal that a rate rise is not imminent.
The Federal Reserve will continue to focus on low underlying inflation in pushing aggressive measures to support the US recovery, even as European authorities fret about rising energy and food prices.
European Central Bank President Jean-Claude Trichet's eight year non-renewable term expires at the end of October 2011. European Union leaders must select a new president "from among persons of recognized standing and professional experience in monetary and banking matters".
The value of the euro may have come under pressure in recent months, but there is some good news for the single European currency -- the production of counterfeit notes and coins remains relatively low.
European Union finance ministers agreed on Tuesday to include targets on liquidity in new, tougher European bank stress tests to be conducted by the end of May, with results in the third quarter, EU presidency sources said.
Euro zone finance ministers called on Monday for an increase in the effective lending capacity of the currency bloc's rescue fund, but EU paymaster Germany said there was no urgency and it would be March before a firm plan was in place.
European Central Bank President Jean-Claude Trichet on Saturday urged euro zone governments to make "enormous efforts" to reduce their debt.
The eurozone faces short-term price pressures which could linger, the European Central Bank said on Thursday, showing it could raise interest rates to contain inflation even while the bloc is gripped by a debt crisis.
The euro rose weakly against the dollar on Wednesday while Asian stocks edged higher, but investors were increasingly nervous ahead of a key bond sale by ailing eurozone member Portugal later in the day.
Portugal is likely to pay record high premiums to place its debt on Wednesday, but recent bond buying by the European Central Bank should avert a dramatic rise in yields to levels that could make the country seek a bailout.
Eurozone finance ministers are likely to consider next week the option of raising the effective lending capacity of the currency bloc's rescue fund as part of efforts to calm sovereign debt markets, eurozone sources said.
US stocks lost ground on Monday, with the Dow and S&P 500 heading for a third straight session of losses, as a once-buoyant market sagged at the start of the earnings season.