A wave of pressure on emerging market currencies

An important wave of pressure on emerging market currencies started this week, starting with the sharp depreciation of the Argentine peso and the Hong Kong dollar, the Brazilian real and the Turkish lira.

The Brazilian real fell sharply Monday at the start of the session, reaching its lowest level against the US dollar since the end of May, as local markets were hit by high market volatility and political uncertainty reigning in neighboring Argentina. The dollar rose 1.8% to 4.01 riyals, its highest level since May 29, but improved slightly Tuesday to reach 3.96 riyals to the dollar.

In Hong Kong, the local currency (the Hong Kong dollar) fluctuated strongly against the US dollar yesterday, falling during the session to a low of $ 7.84501 against Hong Kong, continuing the strong fluctuations that continue since last May. HONG KONG – Hong Kong's main stock index, the Hang Seng, lost 1.8% in trading Monday and 2.1% on Tuesday, closing at 25,281 points, close to an annual low. It was 24,440 in October 2018.

The cancellation of a large number of flights affected the local currency and the stock market, while Carry Lam, general manager of the Hong Kong Authority, warned that the city, the main center financial backing of Asia, was heading towards "an abyss".

Lam, speaking at a press conference, continued to ignore questions about how his government was managing weeks of popular protests, according to Bloomberg.

The Hang Seng real estate index fell 1.9%, losing more than 20% of its value compared to its highest level of April. Hong Kong's largest airline, Cathay Pacific, dropped 5.4 percent, its lowest level in 10 years, after the Chinese aeronautical authorities banned pilots attending the event from traveling to mainland China.

A report from the China Industrial and Commercial Bank (ICBC) warned that a "fragile crisis management" would result in "irreparable damage" to Cathay Pacific's reputation, thereby reducing its rating to "cruelly necessary". "The market has continued to fall today and the sales pressure remains strong," said Linus Yip, an economist at First Shanghai Securities.

The Turkish lira lost more than 1% Tuesday, down for a third consecutive session, as investors remained cautious about emerging markets after the Argentine peso hit record lows against the dollar.

At 12.17 GMT, the reading was at 5.6245 for a dollar, down about 1.1% from the closing level of 5.5630 on Monday. Earlier, the lira had fallen to 5.6360 lira for the dollar, its lowest level since July 29th.