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Drone attacks bring fresh troubles for emerging market investors

Fresh from their longest rally in 20 months, many currencies foundered after the weekend drone attack on the Saudi Aramco installations led Riyadh to halve production

Bloomberg 

Saudi Aramco
Smoke is seen following a fire at Aramco facility in the eastern city of Abqaiq, Saudi Arabia. Photo: Reuters

The burst of political tension triggered by the strikes on Saudi Arabia’s oil facilities has presented another conundrum for emerging-market traders.

Fresh from their longest rally in 20 months, many currencies foundered after the weekend drone attack on the installations led Riyadh to halve production — cutting roughly 5 per cent of global supply — prompting the biggest intraday jump in crude prices on record.

The Indian rupee, Turkish lira and South African rand were among the worst-hit, while MSCI’s index of emerging stocks ended a three-day winning streak.

The conflagration added a fresh layer of complexity to a market that was last week taking heart from signs of a US-China truce on trade and expectations that central banks will ratchet up stimulus to stem the global economic slowdown.

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First Published: Mon, September 16 2019. 23:40 IST
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