Russia’s currency rout has sent a shudder through global markets and the sell-off is spreading to other emerging markets.
The Russian ruble plunged about 12% Monday and continued falling Tuesday, while the Indonesian rupiah fell to its lowest level since the 1997 Asian financial crisis. The Turkish lira and Indian rupee have also fallen sharply.
he ruble and rupiah initially recouped some losses after both central banks took emergency action to stem the falls. But the intervention in Russia didn’t have a lasting impact and the ruble kept plunging.
Emerging markets are more sensitive to global growth concerns, rising interest rates and weak commodity prices.
Indonesia, the world’s largest coal exporter, has suffered from a drop in coal prices, threatening to widen its multi-billion dollar current account deficit.
And Russia is suffering from collapsing oil prices, along with a mix of other headaches, including rising inflation as Western sanctions bite.