Whilst the pandemic has rocked populations and health systems, it has also prompted unprecedented economic challenges and strains on financial systems, particularly in the developing world.

Fortunately, central banks and finance ministries were prepared for remote working, having embraced vigorous business continuity plans, even though such arrangements were generally anticipated for short-term interruptions only.

The initial shock of the pandemic manifested in a flight to quality from investors, which eventually spilled over into a flight to cash as liquidity concerns grew.

This meant that investors sold their emerging markets bonds and equities as they scrambled for safe-haven assets and even for hard cash as the worst fears materialized.

Foreign exchange rates are a reliable barometer of investor sentiment, and the severe gyrations witnessed in early 2020 suggested that emerging market carry trades were being hurriedly unwound.

In some cases, the downside was reversed in the second half of the year.

A version of this article appears in the print on August 2 2021, of The Himalayan Times.