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World Stocks, Currencies Plummet

World Stocks, Currencies PlummetWorld Stocks, Currencies Plummet

World markets shuddered on Monday, as Turkey’s worsening currency crisis persuaded investors to dump equities and emerging markets and flee to safer assets such as government bonds and the dollar.

The MSCI world equity index, which tracks shares in 47 countries, was down 0.6% on Monday and 1.75% since Friday’s open as the Turkish lira plunged to a record low, forcing the country’s finance minister to announce an economic action plan to ease nerves, Reuters reported.

The lira has tumbled on worries over Turkish President Tayyip Erdogan’s increasing control over the economy and deteriorating relations with the United States. It fell as much as 12% at one stage on Monday, then recovered to a loss of 8.5%.

In other emerging markets, the South African rand and the Mexican peso were down 2.8% and 1.8% respectively on Monday, as two examples of emerging markets hit by contagion.

The Indian rupee weakened to an all-time low of 69.62 per dollar in early trade according to Reuters data before recovering to 69.695 following the actions of the Turkish central bank. Reuters also reported that the Indonesian rupiah touched its weakest level in nearly three years before the country’s own central bank intervened to support the currency.

And in Europe, three of the largest Turkey-exposed banks, Unicredit, BBVA and BNP Paribas saw their stocks slip Monday morning as fears rose over how hard the lira’s slide would make foreign currency debt repayments.

The Swiss franc, gold, Japanese yen and Japanese government bonds have all witnessed buying as investors sought more security for their capital investment. The euro fell to a one-year low against the dollar and sank to a one-year trough against the Swiss franc as well. It hit a 10-week low to the yen around 125.45.

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