Emerging currencies weaken led by South Africa on Fed, China

Emerging-market currencies weakened, led by South Africa’s rand, on speculation the Federal Reserve will scale back stimulus and signs of a slowdown in China. Turkey’s lira sank as the prime minister warned protestors and lashed out against financial speculators.

The rand slid to a four-year low against the dollar on a closing basis and India’s rupee sank to a record. The lira headed for the biggest retreat in a year. Emlak Konut Gayrimenkul Yatirim Ortakligi AS slumped by the most on record in Istanbul after the state-owned property developer canceled a secondary public offering, citing market conditions amid protests.

South Africa’s currency depreciated 2% to 10.1664 per dollar at 2:10 p.m. in London. A report June 7 showed American employers took on more workers than forecast in May after Fed Chairman Ben S. Bernanke told Congress last month that the central bank could reduce its bond purchases, among stimulus measures known as quantitative easing, if the job market improves in a “real and sustainable way.” Chinese industrial production rose a less-than-forecast 9.2% from a year earlier and factory-gate prices fell for a 15th month, National Bureau of Statistics data showed yesterday in Beijing.

“The pressure continues to be on emerging-market currencies almost everywhere,” Martial Godet, head of emerging- markets strategy at BNP Paribas SA in London, said by e-mail. “Foreign-currency reserves, current-account balances, flows are very much at the center of the focus in a scenario of QE tapering.”

Commodity Currencies

The MSCI Emerging Markets Index fell even 0.7% to 973.62 even as 364 stocks advanced and 350 declined. The gauge has dropped 7.7% this year, compared with a 10% gain in the MSCI World Index. The developing-nation index trades at 10 times projected 12-month earnings, compared with the MSCI World’s 13.6 times, data compiled by Bloomberg show.

The Bloomberg-JPMorgan Asia Dollar Index dropped to the lowest level since September as the rupee, the South Korean won and the Philippine peso depreciated at least 1.1% versus the dollar. The Polish zloty, the Hungarian forint and the Czech koruna lost at least 0.3% versus the euro today. Brazil’s real slipped 0.8% versus the dollar.

The rand slid as much as 2.6% to the lowest since March 2009. China’s export gains were at a 10-month low and imports dropped after a crackdown on fake trade invoices while fixed-asset investment growth moderated and new yuan loans declined. China is the biggest buyer of South African raw materials including iron ore and coal.

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