LONDON Jan 21 Russia's rouble fell sharply to a
new record low on Thursday, following the latest slide in oil
prices, and selling pressure remained firmly on emerging market
stocks already suffering their worst start to a year.
The benchmark emerging equity index was down 0.7
percent to fresh six-and-a-half year lows, led lower by Chinese
mainland stocks and Russian shares
, with dollar-denominated stocks touching a 13-month low.
The rouble plunged through 83 to the dollar for the
first time on record in early Moscow trading and
didn't stop until it had gone past, weakening 4.4 percent on the
"I wouldn't say it was panic, but the way we described it
was that it has been a brutal repricing," said Joseph Dayan,
head of markets for Russia broker BCS global markets in London.
The breakneck pace of the fall sent tremors across emerging
markets, especially ex-Soviet states.
Neighbouring oil producer Kazakhstan's tenge slumped
around 3 percent to its own all-time low, and
Belarus's rouble hit a record trough against the dollar
as it tumbled 5.5 percent.
In central Europe, Poland's zloty also hit a fresh
four-year low against the euro, with it still being hit by
concerns about the actions of the new conservative government,
which had triggered a surprise downgrade of Poland's credit
rating by Standard & Poor's last Friday.
Amongst the few bright spots, Hong Kong's dollar
rebounded from Wednesday's over eight-year low, but the stock
market lost almost 2 percent to plumb levels not seen
since August 2012.
Chinese stocks took another 3 percent hammering
though to send Asia shares more broadly to their latest 4-year
Investors have been dumping risky assets all month as Brent
crude has sold off to 2003 lows, with Iranian
barrels returning to an already over-supplied global market and
persistent worries about Chinese demand.
As well as the sell off in currencies and stocks, EM
dollar-bond spreads over safe-haven U.S. treasuries have blown
out to 514 basis points (bps), the highest in almost seven
"As long as volatility remains heightened, oil prices keep
falling, and China concerns remain in place, there is no space
for emerging market assets to rally and they will be quite
fortunate if they don't sell off more," said Cristian Maggio,
head of EM strategy at TD Securities.
The Washington-based Institute of International Finance
(IIF) is forecasting net capital outflows of $448 billion in
2016, after $735 billion was withdrawn from emerging markets in
For GRAPHIC on emerging market FX performance 2016, see link.reuters.com/jus35t
For GRAPHIC on MSCI emerging index performance 2016, see link.reuters.com/weh36s
For GRAPHIC on MSCI emerging Europe performance 2016, see link.reuters.com/jun28s
For GRAPHIC on MSCI frontier index performance 2016, see link.reuters.com/zyh97s
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see )
(Additional reporting by Marc Jones Editing by Jeremy Gaunt)