Brutal Argentina-Turkey sell-off engulfs EM peers; Peso hits all-time low

Peso hits an all-time low, policy makers raise benchmark rate to 60%

The massive currency plunge in Argentina and Turkey deepened, spurring a sell-off in emerging

markets.

The peso tumbled to a record low, prompting Argentine policy makers to raise the nation’s benchmark rate to 60 per cent from 45 per cent. In Turkey, a report that the central bank’s deputy governor was set to resign sank the lira. South Africa’s rand extended its slide, sending volatility to its highest since December 2016 amid a controversial land reform debate. Brazil’s real pared losses after the monetary authority extended its currency intervention.

Emerging markets got pummeled again amid concern that Argentina and Turkey’s struggles to restore investor confidence will pressure their economies further — while embroiling the rest of the developing world. That comes at a really bad time when considering the other challenges that investors face — the end of an era of cheap money, prospects of a global trade war and deep political uncertainties in places such as Brazil.

“These currencies are infecting emerging markets,” said Shamaila Khan, director of emerging-market debt at AllianceBernstein in New York. “There will be volatility around headlines and today is one of the negative days.”