Financing conditions have tightened across emerging markets (EMs). As we pointed out in our previous report, improvement in financial conditions in December-January was largely caused by excessively dovish market expectations with regards to the Federal Reserve’s tightening. Consequently, after the change in market perceptions in February, spreads have broadly widened across most EMs. EM exchange rates have also depreciated last month, but developments in the U.S. in the past few days may partially reverse the trend due to renewed expectations of a less tight monetary stance, and subsequently, a weaker U.S dollar.