A letdown for the lira. A rough ride for the ringgit. The terrible tenge.
Emerging markets are getting squeezed by China’s sputtering economy, falling commodity prices, and the prospect for a hike in US interest rates. That’s been reflected by a decline in the value of currencies from Malaysia to Mexico. And what had been a steady slide is fast turning into a rout after today’s brutal sell-off in Asian markets.
China’s clumsy devaluation and increasingly desperate stimulus efforts are spooking investors in countries that rely on Chinese demand. The Malaysian ringgit has dropped to a 17-year low against the dollar; Vietnam has devalued the dong three times this year.
Weaker demand from resource-hungry China, when combined with a glut in oil and other important commodities, is putting pressure on currencies like the Nigerian naira, South African rand (now trading at an all-time low against the dollar), and Russian ruble. Central Asian currencies, like the Kazakh tenge, are being brutalized by simultaneous slowdowns in their two most important trading partners—Russia and China.