Emerging-market fears are baseless

The sell-off in emerging markets last week resembled the sort of staged swoon in which a cushion is destined to break a leading lady’s fall. In a YouTube video, Argentine president Mauricio Macri asked the IMF to speed up $50bn in bailout payments. This was regarded in some quarters as proof of deep economic peril.

Yet turning to the IMF and accepting its conditions is the sort of flexible move that made probusiness Macri a hit with western investors in the first place

He could have picked a more traditional medium for his message than YouTube. And the IMF should have spoken up sooner. Its delay has caused confusion. More conventionally, Argentina raised a key interest rate from 45% to 60%. Its currency fell to a record low against the US dollar anyway. That is a problem for a country with four-fifths of its sovereign debt in dollars. Argentine equity funds have suffered the heaviest run of outflows in seven years.

Fears that Argentina will not make debt payments without IMF help are legitimate. The yield on its 100-year bond reached a record 10%. But there is no need for conniptions about contagion. Emerging-market currencies only fell 2% against the dollar in August. This is not extraordinary in an illiquid market.

Argentina attracted money using high rates and prospects of a turnaround — not proof that one had occurred. It also shows no sign of wanting to reprise its role as a serial defaulter. It will not have to if the IMF acts as a crash mat by starting the bailout with a hefty lump sum. London, September 2