Emerging Assets Drop as Rupee, Lira Fall to Record Lows on Fed
- Turkish currency declined even after surprise rate increase
- Philippine peso breaches 50 per dollar first time since 2008
The Headwinds Facing Emerging Markets
Emerging-market assets fell as traders increased bets on Federal Reserve interest-rate hikes, curbing demand for higher-yielding investments. India’s rupee and Turkey’s lira dropped to record lows.
Stocks in Indonesia paced declines in developing-nation equities and Vietnam’s dong weakened as the Philippine peso dropped to 50 per dollar for the first time in eight years. The lira erased gains even after the central bank raised interest rates for the first time since January 2014.
The dollar traded near a decade high after U.S. economic data showed rising orders for durable goods and improved consumer sentiment, adding to the case for tighter Fed policy. Donald Trump’s U.S. election pledges to boost infrastructure spending have fanned speculation rates will rise, potentially eroding the extra yield investors earn on riskier developing-nation assets.