MARCUS ASHWORTH: Why this emerging market selloff looks contagious
'To stem the slide in its currency Argentina raised its key rate to a whopping 60 percent on Thursday, but the peso was still 30 percent weaker from Monday'
The difficulties for emerging markets have entered a new phase. What were once clearly country-specific crises, well contained within their borders, are bleeding across the world. To stem the slide in its currency Argentina raised its key rate to a whopping 60 percent on Thursday, but the peso was still 30 percent weaker from Monday. Though Turkey is no closer to solving its many problems, it’s hard to see why the lira needed to fall 4 percent on Thursday. Explanations that this is due to the resignation of one of the central bank’s four deputy governors don’t convince — he’s only gone to take another government job. Similarly, there doesn’t seem to be any particular reason why South Africa’s rand or the Brazilian real needed to weaken about 3 percent.
This looks like contagion. One emerging country’s problems have become other emerging countries’ problems, and it’s hard to see how to break the cycle. What’s really worrying is that this week’s gyrations don’t look to have be...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.