By Ye Xie and John Detrixhe
Bloomberg - Jan 24, 2014
The worst selloff in emerging-market currencies in five years is
beginning to reveal the extent of the fallout from the Federal Reserve’s
tapering of monetary stimulus, compounded by political and financial instability.
The
Turkish lira plunged to a record 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, allowing the currency to drop the most 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 scale
back 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.
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