Categories: CurrenciesRetirement Planning and Investing

Contagion Spreads in Emerging Markets as Crises Grow

M4D GROUP

Contagion Spreads in Emerging Markets as Crises Grow (Bloomberg)

The worst sell-off in emerging-market currencies in five years is starting to show ill effects from the Federal Reserve’s tapering of monetary stimulus, amid political and financial instability. The Turkish lira and South Africa’s rand fell yesterday to a level weaker than 11 per dollar for the first time since 2008. Argentine policy makers devalued the peso by reducing support in the foreign-exchange market to let the currency drop its furthest in 12 years to an unprecedented low. Investors are losing confidence in some of the biggest developing nations, extending the currency-market rout triggered last year when the Fed first signaled it would reduce stimulus. While Brazil, Russia, India, China and South Africa were the engines of global growth following the financial crisis in 2008, emerging markets now pose a threat to world financial stability. “The current environment is potentially very toxic for emerging markets,” said Eamon Aghdasi, a strategist at Societe Generale SA in New York.

Paul Dykewicz

Paul Dykewicz is the editor of StockInvestor.com and the editorial director of Eagle Financial Publications in Washington, D.C. He writes and edits for the website, as well as edits investment newsletters, time-sensitive trading alerts and other reports published by Eagle. He also is an accomplished, award-winning journalist who has written for Dow Jones, USA Today and other publications, as well as served as business editor of a daily newspaper in Baltimore. In addition, Paul is the author of the inspirational book, "Holy Smokes! Golden Guidance from Notre Dame's Championship Chaplain." He received his MBA in finance from Johns Hopkins University, where he was a two-time president of the school's Finance Club. In addition, Paul has a bachelor's degree from the University of Michigan and a master's degree in journalism from Michigan State University. Outside of work, Paul volunteers with a faith-based organization to assist the poor in Southeast Washington, D.C., to learn personal finance skills to lift themselves out of debt.