The currencies of emerging markets

The currencies of emerging markets stabilized performance in trade in Asia on Wednesday after reaching 15-year lows along the collapse of shares in China and the free fall in commodity prices, transmit Financial Times. Exporters of raw materials from Brazil, Russia and Colombia have suffered some of the worst sales as a result of continuing and this week lowering the price of commodities such as oil, copper and iron ore.
New worries
Expectations of analysts turbulence yet to strengthen when the US Federal Reserve decision to finally raised key interest rates from current levels near zero, which will probably have a chilling effect on emerging markets.
“Any change in expectations regarding the first increase in interest rates in the US, driven by strong US economic data could boost the existing volatility,” said Morgan Stanley analyst James Lord.
At the end of trading on Asian markets on Wednesday the Thai baht registered a decrease of 0.31% against the dollar, the South Korean won was up by 0.53% and the rates of the Malaysian ringgit and Indonesian rupiah remained unchanged, notes FT.
Currency markets act as a guide for investor sentiment, so their decline increases the likelihood of a deepening of the sale of the equity and debt markets. The index MSCI Emerging Markets, which tracks the performance of the capital markets in developing countries, has lost 10.9 percent this year amid surging prices, which are financed governments and the corporate sector in emerging economies such as Brazil, Turkey and Russia.
“The next risk is that continued volatility in China’s financial markets could cause additional response to the global capital markets, especially if other risks materialize,” said Alberto Gallo from RBS.
Failure of Beijing to stabilize its domestic stock market in recent days after the unprecedented sales alarmed investors and undermined confidence in the Chinese economy, dragging down prices of commodities, leaving emerging markets vulnerable to subsequent shocks.
The Brazilian real and the Colombian peso lost 22% and 17% during the year, which contributed to lowering the JPMorgan Emerging Market Currency index, which measures the performance of the most traded currencies in developing countries against the dollar to its lowest level since its creation in 1999
According to Michael Mareza at JPMorgan additional factors deepest recession in Brazil and Russia, which suppresses the presentation of the currencies of the two countries.
The infection is not limited to the countries exporting raw materials, writes FT. The Turkish lira also be impaired by 15% last year amid political uncertainty in the country, the flow of refugees from Syria and armed conflict with “Islamic State” and separatist Kurdistan Workers Party (PKK), adds the publication.