Global economy CRISIS: Argentina peso, India rupee and Turkey lira currencies PLUMMET
CURRENCIES in Turkey, India and Argentina have plummeted sparking fears of a global economy crash.
By CARLY READ
Express.co.uk
Fri, Aug 31, 2018
Stock markets have been rocked after the Argentine peso nose-dived 12 percent, triggering a 60 percent interest rate hike by the nation’s central bank.
This followed a tumble from the struggling Turkish lira in what has been a fourth day of declines.
India followed suit when its rupee slumped to a record low against the US dollar today, which had toppled more than 11 percent since the beginning of the year.
Also in Asia was the Indonesian rupiah which hit a three-year low after a series of terrifying earthquakes throughout the whole of August that destroyed Lombok and neighbouring Bali.
Commenting on the peso being down more than 45 percent against the dollar this year, A DBS analyst said: “Emerging markets will remain pressured by the Argentine peso and Turkish lira crises.”
They added: “Argentina has hiked rates to a record 60 percent to address double-digit inflation, but this would exacerbate the recession, and coupled with budget account deficits of around 5 percent of GDP [gross domestic product] have increased the risk of for the government to default on its debt.”
The lira fell following the re-election of Turkish President Recep Tayyip Erdogan, who has always favoured rapid growth over inflation which is currently at more than 15 percent.
Over time, inflation has led to the lira spiralling and investors losing faith in Turkey’s fiscal discipline.
Mr Erdogan, who calls himself “the enemy of interest rates”, has instead pressured the central bank against monetary tightening.
As for the peso, this plummeted due to a lack of investment from sceptical investors when President Mauricio Macri demanded the International Monetary Fund (IMF) to speed up the release of its $50billion bailout package to shore up next year’s budget.
The rupee has suffered due to rising oil prices and strong month-end dollar demand.
The currency dropped to 0.011 to the pound, while the peso stood at 0.020 to the pound.
The Rest…HERE
