The last week begun with a continuation of fall in Turkish lira which had started by end of earlier week after US President  Donald Trump announced additional economic sanctions doubling tariffs on imported Turkish steel to 50% and on aluminium to 20%.
In response to this last week, the Turkey regulator cut the limit on lenders’ swap and swap-like transactions to 25% of shareholder equity, from 50%. 
This move limited funds’ access to lira liquidity in the offshore swap market and made it harder for them to borrow the currency from local lenders and short it. Turkish government also doubled tariffs in US imports, including cars and alcohol. 
The Turkish lira which witnessed significant swings during last week ended last week at 6.0177 against the US dollar and had fallen by more than 58% YTD. In last week, Indonesia’s central bank surprised by raising its benchmark interest rate a fourth time since May, moving swiftly to contain the volatility sweeping across emerging markets due to Turkish contagion and curb a slide in its currency. 
The Indonesia rupiah ended last week at 14,593 against the US dollar and had fallen by close to 8% YTD. Indonesia’s current-account deficit and a relatively high foreign ownership of government bonds made the economy vulnerable to outflows. 
In last week, Argentina took emergency steps to stabilise its currency in the wake of an emerging-market rout caused by Turkey’s crisis, jacking up its already highest-in-the-world interest rate by 5 percentage points and announced it will sell $500mn to support the peso. Argentina suffers from fast inflation and sizeable current-account and budget deficits and is reacting with policies. The Argentina peso was at 29.8675 against the US dollar and fallen by more than 60% YTD.
The deputy governor of SA Reserve Bank A Daniel Mminele stated last week that the SA Reserve Bank was surprised by the magnitude of the rand weakness but the foreign exchange market conditions were “nowhere near” requiring the bank to intervene.
If there were to be a situation where we were concerned that there would be huge disruptions in the market to a point where the orderly functioning of the market was in jeopardy, we would consider becoming involved but we are nowhere near those kinds of circumstances. South African rand was at 14.6382 against the US dollar and fallen by more than 18% YTD.
The Indian rupee had reached an all-time low above 70 against the US dollar and ended last week at 70.1575 against the US dollar. The RBI‘s position is that it does not target the exchange rate and is mandated to keep inflation at the 4% midpoint of its targeted band in the medium term. 
The dollar index surged last week and ended last week at 96.101. The fear of Turkish contagion gave boost to the US dollar. The euro was at 1.1438$ and pound at 1.2749$ by end of last week. The concerns of Turkey exposure to European banks and Brexit concerns had weakened euro and pound respectively.
The dollar’s strength weakened the precious metals with gold at $1184.25/ounce and silver at $14.8038/ounce by the end of last week. Significant volatility was seen in global capital markets on account of the fear of Turkish contagion falling to emerging economies and recent trade dispute concerns between US and China.
In the last week Qatar, Dubai and Saudi capital markets witnessed a fall by around 4%. However, global markets recovered a bit by the end of last week on hopes that China and US are working on a plan to hold talks to end a trade dispute that would result in meetings between President Donald Trump and Chinese leader Xi Jinping at a summit in November. 


Dr R Seetharaman is Group CEO of Doha Bank.

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