Wave of pressure on currencies in emerging markets
Wednesday – 12. Dhu al-Hijah 1440 – August 14, 2019 Issue Number [
London: "Middle East"
A big wave of pressure in emerging markets began this week, starting with sharp depreciation of the Argentine peso and Hong Kong dollar, the Brazilian real and the Turkish lira.
The Brazilian real dropped sharply in early trade on Monday, reaching its lowest level against the US dollar since late May, as local markets were hit by sharp market volatility and political uncertainty in neighboring Argentina. The dollar rose 1.8 percent to 4.01 riyals, its highest level since May 29, but improved slightly on Tuesday, to 3.96 riyals to the dollar.
In Hong Kong, the local currency (Hong Kong dollar) yesterday varied strongly against the US dollar as it fell during trading at a low 7.84501 Hong Kong dollars against the US dollar, continuing intense fluctuations that continued from last May. HONG KONG – Hong Kong's premier stock index, Hang Seng, fell 1.8 percent on Monday to trade and lost 2.1 percent on Tuesday, closing at 25,281 points, approaching the annual low. It was at 24,440 in October 2018.
The cancellation of a large number of flights was affected by the local currency and the stock market, while Carry Lam, chief executive of the Hong Kong government, warned that the city, Asia's main financial hub, was headed for an "abyss".
Lam, speaking at a news conference, continued to ignore questions about how her government cope with weeks of popular protests, according to Bloomberg.
The Hang Seng real estate index fell 1.9 percent, losing more than 20 percent from its highest level in April. Hong Kong's main airline Cathay Pacific dropped 5.4 percent to a 10-year low after Chinese aviation authorities banned pilots participating in the protests from flying to land.
A report by the Chinese Industrial and Commercial Bank (ICBC) warned that "poor crisis management" would lead to "irreparable damage" to Cathay Pacific's reputation, reducing its rating to "badly needed". "The market has continued to decline and sales pressure is still strong," said Linus Yip, an economist at First Shanghai Securities.
The Turkish lira fell more than 1 percent on Tuesday, falling in a third straight session as investors remained wary of emerging markets after the Argentine peso hit record lowers against the dollar.
By 12.17 GMT, the lira was 5.6245 for the dollar, down about 1.1 percent from Monday's close, 5.5630, for the dollar. Earlier, the lira dropped to 5.6360 lira for the dollar, its lowest level since July 29.