Russian Rouble Drop Triggers Emerging Market Rout

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.

via CNN

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza