Currency crisis in emerging markets could lead to more economic issues

Investors in emerging markets are in attempt to measure whether the currency crisis and the increase in interest rates used to tackle the crisis could turn into a much bigger crisis and even recession.

The Turkish central bank on Thursday, tried to draw a line under the collapse of its currency, the lira. The lira has had a 40 percent collapse this year through increasing interest rates by more than 6 percentage points to 24%.

According to Money Web Argentina is struggling to grow its peso which has halved un value despite punitive interest rate rises to 60%.

Other currencies have been caught in the slipstream, which India’s rupee plumbing record lows and South Africa’s rand, Russia’s rouble and Brazil’s real losing 15-20% this year so far, says Money Web.

Signs of a market turmoil are already showing on economies. South Africa fell into a recession in the second quarter of the year. Argentina is also expected to fall into recession.

 

Source: Money Web

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *