Emerging-Market Currencies Decline Amid Fed Bets as Lira Tumbles

Updated on
  • Higher Treasury yields ‘not supportive’ for EM currencies: ABN
  • Equities in developing countries halt two-day advance

Yellen: The Fed Is Not Behind the Curve

Emerging-market currencies and stocks dropped after better-than-estimated U.S. economic data bolstered the case for the Federal Reserve to raise interest rates, dimming the allure of riskier assets. Turkey’s lira sank.

Traders pushed down the value of assets in developing nations after the yield on 10-year Treasury notes climbed to the highest level this year as data showed a jump in housing starts and a drop in jobless claims.

“The higher 10-year U.S. Treasury yield is not supportive for emerging-market currencies," said Georgette Boele, a currency and commodity strategist at ABN Amro NV in Amsterdam.

Currencies

  • The MSCI Emerging Markets Currency Index fell 0.5 percent at 4 p.m. in New York.
  • Fifteen out of 24 developing-nation currencies tracked by Bloomberg declined.
  • Turkey’s lira extended this year’s plunge to 8 percent; UniCredit says policy remains too loose.
  • The South Korean won fell 0.9 percent after a board member of the central bank said it may cut interest rates that are already at a record low.
  • Peru’s sol gained 0.7 percent to its highest level in five months.

Stocks

  • The MSCI Emerging Markets Index retreated 0.4 percent, halting a two-day advance.
  • Egypt’s EGX 30 Index dropped the most since June after the government said it would delay the start of a capital-gains tax on stocks.
  • Brazil’s Ibovespa fell 0.3 percent, led by miner Vale SA.
  • Kuwait’s SE Price Index advanced for a 12th day, bringing its gains this year to 12 percent, the most among more than 90 gauges tracked by Bloomberg.

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— With assistance by Ahmed A Namatalla, Paul Wallace, and Srinivasan Sivabalan

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