EMERGING MARKETS-Lira, rand tumble after Argentine peso crashes

  • Reuters
  • Stock Market News
EMERGING MARKETS-Lira, rand tumble after Argentine peso crashes
Credit: © Reuters.

By Claire Milhench

LONDON, Aug 30 (Reuters) - Emerging currencies sold off sharply again on Thursday after Argentina's peso suffered its biggest one-day decline since 2015 overnight, with Turkey's lira, the South African rand and the Indian rupee all feeling the heat.

The Argentine peso ARS=RASL crashed over 7 percent after a collapse in investor confidence in President Mauricio Macri's government. The central bank intervened to try and stabilise the peso, but the currency still closed at a record low of 34.10 per dollar. International Monetary Fund (IMF) said it was studying Argentina's request to speed up disbursement of a $50 billion loan programme. external environment has deteriorated since the programme was agreed, so more policy effort may be needed in return for a rephasing of the arrangement," said Stuart Culverhouse, chief economist and global head of fixed income research at Exotix Capital.

"While this should still be viewed as positive, it demonstrates how fragile and exposed Argentina remains just two months after its IMF agreement."

Piotr Matys, an emerging markets strategist at Rabobank, added that the peso's continuing fall despite the IMF programme only proved how difficult it was to restore investor confidence once it was lost: "It's a major warning signal for Turkey."

The Turkish lira TRY= tumbled 1.9 percent to a two-week trough in its fourth straight day in the red. Turkish five-year credit default swaps rose 8 basis points (bps) from Wednesday's close to a two-week high of 516 bps, according to IHS Markit.

Ratings agency Moody's sounded the alarm about Turkish bank debt earlier this week. However, Turkey's finance minister was quoted as saying he saw no big risk to the economy or financial system. stocks .XU100 fell 0.6 percent and Turkish bank shares .XBANK were down 1.1 percent.

Matys noted Turkey hadn't announced any new measures to restore investor confidence since last week's holiday.

"If anything, recent comments from officials indicate they are confident that the measures they have implemented so far will prove sufficient, which is not the case," he said, adding investors still wanted to see a proper rate hike and tighter fiscal policy.

South Africa's rand ZAR=D3 fell 1.6 percent and stocks .JTOPI slipped 1.2 percent after telecom group MTN's shares MTNJ.J plunged over 22 percent to their lowest level since 2009. The moves followed an order from Nigeria that MTN return $8.1 billion. Asia, India's rupee INR= slipped 0.3 percent to another record low and the Indonesian rupiah IDR= hit a near three-year low.

China's yuan CNY= weakened 0.2 percent, erasing all the gains it has made this week following the central bank's latest move to stabilise the currency.

Chinese mainland stocks .CSI300 .SSEC fell over 1 percent and Hong Kong .HSI lost 0.9 percent. U.S. tariffs on another $200 billion of Chinese goods are expected to take effect later next month. one bright spot, U.S. President Donald Trump has signed a proclamation allowing targeted relief from steel quotas on South Korea, Argentina and Brazil, and from aluminium quotas on Argentina. did little to arrest the selling, however, with MSCI's benchmark emerging equities index .MSCIEF down 0.5 percent.

Twenty out of 23 emerging market stock indexes are trading below their 200-day moving average, a technical analysis showed, suggesting further downside risks.

Equities

Latest

Net Chg % Chg % Chg

on year

Morgan Stanley (NYSE: MS )

Emrg Mkt Indx .MSCIEF 1065.40

-5.13 -0.48 -8.03

Czech Rep

.PX

1078.46

-0.39 -0.04 +0.03

Poland

.WIG20

2360.79 -19.89 -0.84 -4.08

Hungary

.BUX

37051.47 -183.39 -0.49 -5.91

Romania

.BETI

8344.73 +11.80 +0.14 +7.62

Greece

.ATG

737.90

-5.06 -0.68 -8.03

Russia

.IRTS

1085.91

+0.90 +0.08 -5.94

South Africa

.JTOPI 53408.58 -622.02 -1.15 +1.67

Turkey

.XU100 93280.71 -586.23 -0.62 -19.12

China

.SSEC

2737.74 -31.56 -1.14 -17.22

India

.BSESN 38658.44 -64.49 -0.17 +13.51

Currencies

Latest

Prev

Local

Local

close currency currency

% change % change

in 2018

Czech Rep

EURCZK=

25.74

25.72 -0.09

-0.84

Poland

EURPLN=

4.29

4.29 -0.10

-2.67

Hungary

EURHUF= 326.52

325.58 -0.29

-4.90

Romania

EURRON=

4.64

4.63 -0.28

+0.78

Serbia

EURRSD= 118.13

118.22 +0.08

+0.23

Russia

RUB=

68.17

67.86 -0.45 -15.41

Kazakhstan

KZT=

363.57

363.57 +0.00

-8.46

Ukraine

UAH=

28.27

28.10 -0.60

-0.44

South Africa ZAR=

14.59

14.34 -1.74 -15.32

Kenya

KES=

100.50

100.60 +0.10

+2.59

Israel

ILS=

3.62

3.61 -0.20

-3.80

Turkey

TRY=

6.56

6.45 -1.73 -42.26

China

CNY=

6.84

6.82 -0.23

-4.81

India

INR=

70.78

70.53 -0.35

-9.82

Brazil

BRL=

4.11

4.11 +0.01 -19.34

Mexico

MXN=

19.07

18.95 -0.62

+3.04

Debt

Index Strip Spd Chg %Rtn Index

Sov'gn Debt 11EML EMBIG 389

2

.02 7 70.27 1

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