Emerging-Market Currencies Sink to One-Year Low on Dollar Gains

LAGOS (Capital Markets in Africa) – Emerging-market currencies deepened their slide to the lowest level in a year and stocks retreated amid a U.S. dollar advance.

Every developing-nation currency tracked by Bloomberg fell, and an MSCI gauge of equities extended its selloff from a January peak to 17 percent. South Africa’s rand slipped as the central bank warned of a “challenging” growth outlook, while Chile’s peso joined a slide in copper. The Chinese yuan sank to a one-year low as bets for monetary policy easing mounted. The risk premium on emerging-market sovereign bonds against U.S. Treasuries rose.

“There’s a lot of fear about EM,” Michelle McCloskey, head of the Americas at Man Group, said on Bloomberg TV. “We still see it as an area of growth and big investment within our own firm, but clearly, the conversation of everyday is centred around alternative risk premia.”

Traders knocked down the value of developing-nation assets as the dollar outperformed most of its major peers for a third straight day, the longest streak in two months. While the stock market remains focused on earnings results, trade threats are still a concern. China said Thursday that White House officials were making false accusations, deepening the feud between the world’s two largest economies. Commerce Secretary Wilbur Ross said it’s too soon to say whether a probe into the auto industry will lead to tariffs.

Source: Bloomberg Business News