“China has been the growth story for the better part of 10 or 15 years, and all of a sudden we’re starting to see contraction,” Chris Bouffard, chief investment officer of the Mutual Fund Store in Overland Park, Kansas, which oversees $8.5 billion, said in a phone interview. “That’s going to take a while for market participants to get comfortable with.”
Argentina devalued the peso. It plunged 13% to 7.9239 per U.S. dollar as the central bank scaled back efforts to support the currency.
The Turkish lira declined 1.7% to 2.2968 per dollar. The central bank bought local currency because of “unhealthy price formations” in the market, according to a statement on its website. The lira has tumbled 13% since a probe into government graft erupted on Dec. 17. The Fed said the next day it would start paring stimulus measures that helped spur demand for higher-yielding assets.
“People are trying to get out of emerging markets,” Bhanu Baweja, the head of emerging-market cross-asset strategy at UBS AG, said by phone from London. “Currencies are the weakest link in emerging-market assets. I cannot say that today is the day of reckoning, but more and more people will pay attention to what happens to other emerging-market assets.”
The cost to protect Ukrainian debt against non-payment using five-year credit-default swaps jumped to 825 basis points, the highest since Dec. 16, data compiled by Bloomberg show. Opposition leaders yesterday urged a national strike and gave President Viktor Yanukovych a 24-hour deadline to meet demands for snap elections and annulment of anti-protest laws. Three days and nights of clashes left as many as five people dead and about 2,000 injured as the government gave police special powers to quell demonstrations.
Thailand’s baht fell the most in a week on concern overseas investors will keep pulling money from the nation’s assets as anti-government protests that began late October show no sign of abating. The central bank cut this year’s growth forecast to about 3% yesterday from a November prediction of 4% after unexpectedly holding its policy rate at 2.25%.
The euro gained against 11 of its 16 major peers, advancing 1.1%, the most in almost four weeks, to $1.3690. Gauges of manufacturing and services industries in the euro area expanded more than forecast, according to Markit Economics. The yen appreciated 1.3% to 103.16 per dollar.
Switzerland’s franc strengthened against all of its 16 major peers after the nation raised the amount of capital banks must hold as a buffer to guard against mortgage writedowns.
The rand dropped 1.4% to the weakest level since October 2008. Canada’s dollar, the worst performer among the Group of 10 countries in the past six months, slid 0.2% to C$1.1106 per U.S. dollar, the weakest level since August 2009. Australia’s dollar tumbled 1% to 87.62 U.S. cents.
Copper futures fell 1.5%, the most in more than two months, while zinc and lead dropped more than 1.8%. China is the biggest user of the metal and energy.
Gold climbed 1.9% to $1,262.50 an ounce, the highest settlement since Nov. 19, as the dollar fell.
U.S. natural gas rose 0.9%, heading for the biggest weekly gain since September 2012, with colder-than-usual weather forecast by Commodity Weather Group LLC for the eastern half of the U.S. through Feb. 1.
West Texas Intermediate crude climbed 0.6% to $97.32 a barrel, a three-week high, after a government report showed U.S. distillate-fuel stockpiles tumbled last week as cold weather bolstered demand.
The Energy Information Administration said stockpiles of distillate, a category that includes heating oil and diesel, fell 3.21 million barrels last week to 120.7 million. Crude inventories increased for the first time since November.