More bad news from emerging markets sent U.S.
markets down at the open on Friday. The emerging market selloff is continuing
to impact Europe’s previously more resilient countries.
The emerging-market selloff that began last week on indications
of a slowdown in Chinese manufacturing is showing little sign slowing. Adding
to the slide is the announcement from the U.S. Federal Reserve that it will further
trim its monthly bond-buying stimulus program.
The Turkish lira and the South African rand came under pressure again
after a relatively quiet start to the trading day faded. Both have been hit
hard over the past week and surprise rate increases did little to prop up their
currencies.
A fresh group of countries including Hungary,
Russia and even economically-robust Poland—which all lack Turkey and South
Africa's yawning current account deficits—have stumbled in recent days, and
their currencies all fell further Friday.
Hungary has found itself in the firing line
following a succession of interest rate cuts. One of the National Bank of
Hungary's rate setters said Friday he didn't see a need for an unscheduled
meeting to address the recent emerging market turbulence and a weakening
forint.
According to data from EPFR Global, investors
pulled out of emerging market equity funds at the fastest pace in almost
two-and-a-half years in the week to Jan. 29.
The euro briefly sank to its weakest level in 10
days, trading at $1.3518 against the dollar, as expectations mounted that the
European Central Bank will have to introduce fresh easing measures to head off
the threat of falling prices, before retracing its losses.
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Wall Street Journal.