Emerging-market rout continues as currencies in emerging economies fell for a seventh day, the longest streak since the first quarter of 2015.
Malaysia’s ringgit plunged the most, reaching seven-week low after Brent crude slumped 3.8 percent overnight, casting doubt on the sustainability of recent rebound. A gauge of emerging market stocks also dropped after data from U.S. and China indicates global economic growth remains subdued even with the recent oil rebound.
“As the dollar returns to a stronger trend it will certainly affect investor sentiment on emerging markets on concern about fund outflows,” said Thanomsak Saharatchai, the head of research at KT Zmico Securities Co. in Bangkok. “Further declines in oil prices will also have impact on some developing countries that rely on exports of commodities.”
Developing-nation assets have retreated after rallying in the last four months as data pointed to subdued growth in the world’s biggest economies. The Bloomberg Commodity Index has dropped on five of the last six trading days, and Brent oil closed at a three-week low on Monday. The Bloomberg Dollar Spot Index was set to gain for a sixth day following recent remarks by several Federal Reserve officials that U.S. borrowing costs may rise this year.
The MSCI Emerging Markets Currency Index fell 0.2 percent as of 1:57 p.m. in Hong Kong, and has lost 2 percent in seven days. The ringgit fell 1.2 percent, headed for its weakest close since March 22, and the won lost 0.6 percent. The Philippine peso rose 0.4 percent, the most since March 30, after an anti-establishment candidate claimed victory in Monday’s presidential election.
Chinese stocks in Hong Kong headed for their longest losing streak this year with a seventh day of losses as energy producers slumped. The Hang Seng China Enterprises Index slipped 0.4 percent. PetroChina Co. slid to the lowest level in three weeks after Morgan Stanley downgraded the shares on the outlook for lower oil prices. The Shanghai Composite Index swung between gains and losses after data showed inflation matching economists’ estimates, while factory deflation eased.
