- The Indian rupee briefly fell to an all-time low of 70.1 per US dollar in Tuesday trade.
- Indonesia’s currency also fell to a multi-year low as government ministers discussed strategies to prop up the currency.
- JP Morgan’s emerging markets foreign exchange index is on track for its biggest monthly fall in six years.
There are lingering signs of tension in emerging markets during Tuesday trade after the Turkish lira’s collapse last Friday sent shock-waves through Asia to start the week.
The US dollar exchange rate with the lira has traded between 6.6 and 6.8 for most of today’s session after briefly spiking above 7 on Monday. Turkey’s currency has lost around 45% so far this year.
Elsewhere, the Indian rupee has hit an all-time low against the greenback, briefly falling below 70.
Here’s the weekly move in USD/INR:
A short time ago, the yield on Indian 10-year government bonds was holding steady at around 7.8%. Indian 10-year yields have climbed steadily from around 7.15% since April.
Elsewhere, Indonesia’s President Joko Widodo is holding a cabinet meeting today to discuss strategies for defending against further falls in the Indonesian rupia.
During afternoon trade, the rupia is trading just above its October 2015 low reached yesterday when it fell to 14,625 against the USD:
Reuters reports that Indonesia’s central bank intervened yesterday to protect the currency, and is scheduled to make an interest rate announcement tomorrow.
No change is expected at this stage, although Bank Indonesia has already raised rates by 100 basis points since mid-May as part of efforts to prop up the currency.
As further evidence of contagion risks in emerging markets, an FT report noted JP Morgan’s Emerging Market foreign exchange index fell by 1.3% yesterday to a record low.
The index is currently on track for its worst one-month performance in almost six years.
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