“There was a sense that Turkey, by hiking interest rates, had resolved the lira pressure and by extension would provide comfort to other emerging markets,” said Daragh Maher, a currency strategist at HSBC Holdings Plc in London. “But now the market is a little twitchy that there are still grounds to be nervous regarding emerging markets.”
The ruble weakened 1.1% to 40.9638 against the dollar-euro basket used by Bank Rossii to smooth swings in the currency, the weakest level ever on a closing basis. Russia’s central bank may have spent about $2.8 billion to slow the decline today, according to Dmitry Dorofeev, a money manager at BCS Financial Group in Moscow. That would be the biggest intervention since Sept. 2011, according to Bank Rossii data.
The yen advanced against all but one of its 16 major peers and gained 0.9% versus the euro after two days of declines.
New Zealand’s dollar, known as the kiwi, slipped as much as 1% after the central bank kept its official cash rate at an all-time low of 2.5%. Reserve Bank of New Zealand Governor Graeme Wheeler said policy makers expect to start an “adjustment” of interest rates soon and that there was a need for borrowing costs to be returned to “more-normal levels.”
U.S. stocks sank as earnings forecasts from Yahoo! Inc. and AT&T Inc. disappointed investors. Yahoo slumped 8.8% as its sales outlook signaled slowing growth for the Internet company. Boeing Co. retreated 5.5% and AT&T lost 1.4% after forecasts trailed some analysts’ estimates. The Dow Jones Industrial Average slipped 1.2%, headed for the weakest close since Nov. 7.
The Chicago Board Options Exchange Volatility Index jumped 12% today to 17.75. The gauge of S&P 500 options known as the VIX has gained 30% this year.
Yields on 10-year Treasury notes fell to 2.67%, the lowest level on a closing basis in two months. The Treasury will sell its first issue of floating-rate notes before a Fed policy announcement projected to include further cuts to bond purchases.