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| Turkish crisis: Indian rupee hits record low but lira recovers - business live | |
| (35 minutes later) | |
| The rupee’s woes are a sign that emerging market contagion is worsening, says Neil Wilson of Markets.com: | |
| India’s rupee slipped to a record low against the dollar, with one USD buying 70 rupees at one point this morning. | |
| This follows the chaos in the Argentine peso market on Monday as the currency plumbed fresh depths even as the central bank raised interest rates by 5 percentage points to 45%. | |
| The rand is coming off its lows but the pressure across the board is there to see. | |
| The Financial Times says the rupee is suffering from investors’ concerns about India’s lack of progress in fiscal consolidation and the country’s widening current account deficit. | |
| That sounds rather similar to Turkey’s problems (without the diplomatic row with America, of course) | |
| Overnight, America has warned Turkey that it won’t end the diplomatic row between the two countries until US pastor Andrew Brunson is released from house arrest. | |
| White House National Security Adviser John Bolton met Turkey’s ambassador to the US, Serdar Kilic, yesterday and insisted that Brunson -- who was arrested in 2016 and charged with espionage -- must be freed. | |
| Bloomberg explains: | |
| President Donald Trump’s top national security aide warned Turkey’s ambassador on Monday that the U.S. has nothing further to negotiate until a detained American pastor is freed, according to two people familiar with the matter, signaling a standoff between the countries will continue as Turkey’s financial meltdown spreads to emerging markets. | |
| More here. | |
| Last night, my colleague Martin Chulov reported that a misunderstanding between Donald Trump and Recep Tayyip Erdoğan over Brunson, and a Turkish woman detained in Israel, may have helped caused the crisis. | |
| The Indian government is urging people not to panic about the rupee’s slide to a record low this morning. | |
| Subhash Chander Garg, economic affairs secretary at the ministry of finance, has blame the move on ‘external factors’ (a reference to the Turkish crisis, I think), adding that there is no need to worry. | |
| Newsflash: India’s rupee has fallen to a record low, as Turkey’s currency woes sends ripples through emerging markets. | |
| The rupee fell to 70.09 to the US dollar on Tuesday morning, as investors fretted that the lira crisis will spread to other developing nations. The slide means the rupee has lost a tenth of its value so far this year. | |
| Traders in Mumbai report that the Indian central bank may have stepped in to stabilise the currency after it fell through the 70-point mark for the first time over. | |
| N. S. Venkatesh, chief executive of the Association of Mutual Funds in India, told the AFP newswire that: | |
| “Investors are concerned that the rupee has crossed the 70 benchmark today.... | |
| The Reserve Bank of India’s monetary policy has shown concern for the rupee’s fluctuations so investors should not be worried by knee-jerk reactions in the forex market.” | |
| Turkey's lira is relatively stable after slumping 20% in 4 days, but India's rupee hits record low https://t.co/SyWjEvAUD1 pic.twitter.com/sSKVyGycCM | |
| Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. | Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. |
| Turkey is in the eye of the storm today thanks to the currency crisis that has wiped a third off the lira’s value in the last week. | Turkey is in the eye of the storm today thanks to the currency crisis that has wiped a third off the lira’s value in the last week. |
| As we covered yesterday, the Turkish crisis gave other emerging markets a jolt yesterday - forcing Argentina to hike its interest rates to 45% after the peso hit an all-time low. | As we covered yesterday, the Turkish crisis gave other emerging markets a jolt yesterday - forcing Argentina to hike its interest rates to 45% after the peso hit an all-time low. |
| President Recep Tayyip Erdoğan refused to bow to pressure from the markets yesterday. Instead, he hit out at the US for imposing sanctions in an attempt to force Turkey to release an American pastor named Andrew Brunson, who is currently under house arrest. | President Recep Tayyip Erdoğan refused to bow to pressure from the markets yesterday. Instead, he hit out at the US for imposing sanctions in an attempt to force Turkey to release an American pastor named Andrew Brunson, who is currently under house arrest. |
| He declared: | He declared: |
| “We are together in NATO and then you stab your strategic partner in the back.” | “We are together in NATO and then you stab your strategic partner in the back.” |
| Tuesday’s GUARDIAN: “Fears of global crisis as Turkey battles to halt sliding currency” #bbcpapers #tomorrowspaperstoday pic.twitter.com/Jg70iPtQ11 | Tuesday’s GUARDIAN: “Fears of global crisis as Turkey battles to halt sliding currency” #bbcpapers #tomorrowspaperstoday pic.twitter.com/Jg70iPtQ11 |
| Currently the lira is bobbing around 6.8 to the US dollar, close to Monday’s all-time low of 7.2. Turkey’s central bank seems to have calmed the crisis a little, by pledging yesterday to provide liquidity to its banking sector. | Currently the lira is bobbing around 6.8 to the US dollar, close to Monday’s all-time low of 7.2. Turkey’s central bank seems to have calmed the crisis a little, by pledging yesterday to provide liquidity to its banking sector. |
| But worries over Turkey are mounting; its inflation rate is pushes higher, its current account deficit is worryingly high, and its companies may struggle to repay loans taken out in US dollars. | But worries over Turkey are mounting; its inflation rate is pushes higher, its current account deficit is worryingly high, and its companies may struggle to repay loans taken out in US dollars. |
| The markets remain unconvinced that Erdoğan’s government can cope with the currency crisis, triggered by the diplomatic spat with Washington that has resulted in higher U.S. tariffs. | The markets remain unconvinced that Erdoğan’s government can cope with the currency crisis, triggered by the diplomatic spat with Washington that has resulted in higher U.S. tariffs. |
| Many economists argue that Turkey urgently needs a big rate hike, something Erdogan has opposed in the past. | Many economists argue that Turkey urgently needs a big rate hike, something Erdogan has opposed in the past. |
| European stock markets are expected to open higher, having been dragged down by Turkish worries on Monday. | European stock markets are expected to open higher, having been dragged down by Turkish worries on Monday. |
| Jasper Lawler of London Capital Group says investors will be watching emerging markets today. | Jasper Lawler of London Capital Group says investors will be watching emerging markets today. |
| The selloff in the Turkish Lira and the knock-on effects to other currencies and asset classes will continue to attract attention through today’s session. | The selloff in the Turkish Lira and the knock-on effects to other currencies and asset classes will continue to attract attention through today’s session. |
| Also coming up today | Also coming up today |
| New UK unemployment data is expected to show that Britain’s jobless rate stuck at 4.2%, the lowest in over 40 years. That’s the good news. The bad news is that wage growth probably remains weak, with basic pay expected to only rise by 2.7% year-on-year. | |
| We also get a new estimate of eurozone growth in the last quarter; it will probably confirm that the region’s economy expanded by just 0.3% in April-June. | We also get a new estimate of eurozone growth in the last quarter; it will probably confirm that the region’s economy expanded by just 0.3% in April-June. |
| The agenda: | The agenda: |
| 7am BST: German GDP for Q2 2018 | 7am BST: German GDP for Q2 2018 |
| 9.30am BST: UK unemployment data | 9.30am BST: UK unemployment data |
| 10am BST: Eurozone GDP for Q2 2018 | 10am BST: Eurozone GDP for Q2 2018 |