Investing.com - Emerging market currencies slumped on Monday amid a broad based exodus from riskier assets after the Shanghai stock market dropped more than 8% overnight.
Shares in China plunged on Monday, erasing all of the year’s gains. The decline came as Beijing held off from implementing fresh measures to support equities after markets fell 11% last week.
The steep declines in Chinese equity markets have undermined investor confidence in the government’s ability to revitalize economic growth.
Financial markets have been roiled since China devalued the yuan on August 11, sparking fears that the economy may be slowing at a faster than expected rate.
Data on Friday showing that manufacturing activity in China contracted at the fastest rate in six-and-a-half years in August exacerbated fears over a China led slowdown in the global economy.
Concerns over slowing growth in China have hit investor demand for riskier assets, with emerging markets and commodities among the hardest-hit.
U.S. crude futures fell below the $40 a barrel level on Monday, to the lowest level since February 2009, while Brent crude, the global benchmark, fell below $45 a barrel for the first time since March 2009.
The Turkish lira was lower against the dollar, with USD/TRY hitting highs of 2.986, not far from last Thursdays record highs of 2.999, before easing back to 2.944.
Mounting political uncertainty in Turkey has exacerbated concerns over the central bank’s reluctance to stem the persistent selloff in the currency.
The Turkish lira has tumbled 24% against the dollar this year, making it one of the worst performing emerging market currencies, along with the Brazilian real.
The Russian ruble fell to its lowest levels since January against the dollar, with USD/RUB jumping 2.87% to 71.13. The ruble has fallen nearly 25% against the dollar so far this year.
The Indian rupee fell to its lowest level since September 2013 on Monday, with USD/INR rising to 66.7.
India's central bank governor Raghuram Rajan said Monday the bank was ready to use its foreign exchange reserves to reduce volatility in the currency.
Meanwhile, emerging Asian currencies fell to multi-year lows, with the Malaysian ringgit falling to its lowest in 17 years after Switzerland said it has opened criminal proceedings relating to state investment fund 1Malaysia Development Bhd (1MDB).
Indonesia's rupiah also hit 17-year lows, while the Taiwan dollar and the Thai baht fell to their lowest levels since 2009.