- Financial tumult in Turkey hit the rand, for more than 10% of its value at one point.
- But SA wasn't alone; markets such as China, Russia, and India also felt the effects.
- One economist says its premature to say just how bad things could get.
The South African rand weakened by more than 10% against the US Dollar in the early hours of Monday morning as concerns over Turkey's diplomatic spat with the US, and capital flight risk, sparked turmoil in markets.
See also: 'Clear risks of contagion': European markets drop as Turkey's lira crisis spreads around the world
As Asian foreign currency markets opened on Monday, the Turkish lira continued to plunge to all-time lows, negatively affecting the rand, which followed suit and fell to a low of R15.70 from opening at R14.06 — making it the deepest rand plunge against the dollar in two years.
Have a look at this move just now in the South African Rand... USD-ZAR just popped 10% ... granted of course there's very thin liquidity in this during Asia pic.twitter.com/1mbDhJMR3Y
— David Ingles (@DavidInglesTV) August 13, 2018
Similar meltdowns were recorded in other emerging markets.
Here are five other emerging market currencies also affected by the on-going Turkish Lira meltdown:
1. Mexico's Peso
Traders backed away from the Mexican Peso as fears mount over emerging markets. The Mexican Peso weakened to a low of Mex$19.32, or about R14.44, to the US dollar.
2. Russia's Ruble
The Russians were not spared from the sell-off in emerging market assets. The ruble slumped to a near two-and-a-half year low, also as a result of last week's surprise sanctions by the US.
3. Brazil's Real
Although the Brazilian markets are yet to open, massive sell-offs in the currency have been taking place prior to the start of trade in South America.
4. India's Rupee
Although Asian countries do not have a meaningful exposure to the Turkish lira collapse, the Indian rupee also took a knock that saw it hitting an all-time low of 69.92 (about R14.49) against the dollar.
5. China's Yuan
The mighty Yuan also fell against the US dollar. The Chinese currency slumped 51 basis points to ¥6.87 to the dollar (about R14.48).
It is premature to say just how long and how much the lira crisis will impact markets, Kim Doo-un, a Seoul-based economist at KB Securities told Reuters – especially markets with a thorny relationship with the Trump administration.
But volatility for the rest of the week is a pretty sure bet.
More on the Turkish meltdown and its impact:
- This is why Turkey is in meltdown – and why it is dragging the rand down with it
- Turkey could solve its banking crisis with a massive hike in interest rates — but Erdogan is ideologically against it
- Turkey is blaming social media and 'fabricated news' for the collapse of its currency
- The Turkish lira is sinking so fast it risks 'smashing into the ground' — and people are worried about European contagion
- 'Clear risks of contagion': European markets drop as Turkey's lira crisis spreads around the world
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