Emerging-Market Currencies, Stocks Slump Amid Political Turmoil

  • Lira, won decline the most among world’s major currencies
  • Saudi Arabia leads equities lower as crude oil tumbles

Emerging-market currencies and stocks retreated as heightened political risk in Turkey and South Korea soured investor appetite for assets in developing nations amid a rout in crude oil.

Tension between North and South Korea and debates on constitutional changes in Turkey sent a developing-currency index lower. The lira sank to a record low as traders tested policy makers’ resolve to defend it amid mounting bets on an interest-rate increase. Meanwhile, emerging-market equities had the biggest slump since Dec. 22 as energy shares slid with crude.

“It is a combination of deterioration in sentiment with weaker equities and weakness in oil” that is sending emerging-market currencies and stocks lower, said Georgette Boele, a currency and commodity strategist at ABN Amro NV in Amsterdam and one of the top forecasters for Brazil’s real in the past quarter, according to Bloomberg rankings.

Currencies

  • The MSCI Emerging Markets Currency Index fell 0.3 percent.
  • Turkey’s lira tumbled 1.8 percent, extending this year’s worst performance among the world’s major currencies.
  • South Korea’s won dropped the most in two months.
  • Brazil’s real climbed as state oil giant Petroleo Brasileiro SA announced a bond sale.

Stocks

  • The MSCI Emerging Markets Index of equities retreated 0.3 percent as oil slumped the most in more than five weeks.
  • Saudi Arabia’s Tadawul All Share Index declined to a two-week low.
  • Mexican shares led losses among major benchmarks in the Americas; Brazil’s Ibovespa advanced amid a rally in miner Vale SA.

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