The Russian ruble and the Hungarian forint plunged record low on On Monday, as the Polish zloty fell to multi-year lows as crude prices surged on risks of a western ban of Russian oil, sparkling global inflation fears.
The ruble slipped more by 8% to 130.935 against the dollar on interbank rate in the middle of a ramp up of sanctions by western nations like Russia war on Ukraine intensifies.
The United States and the European Union are now considering the possibility of ban Russian oil imports, send prices of Brent futures near $130 a barrel, a level not seen since 2008.
Currencies of Eastern European countries that are heavily dependent on Russian oil, took a hit due to intense fighting in Ukraine. The Hungarian forint slid towards a record moo of 390.36 against euro earlier in day, while the Polish zloty slid to son lowest level since March 2004.
A push in not only oil prices, but other commodities have added for global inflationary pressures, frightening financial further markets.
“Inflation will accelerate in Europe, reduction in disposable income of households, and this will have negative implications for growth in Europe. This is reflected in these central and eastern European currencies under strong selling pressure,” said Piotr Matys, senior Effects analyst at In Touch Capital Markets.
Even as the euro fell to a new 22-month low on the dollarcurrency of other Central and Eastern European countries took A beat. The Czech koruna and the Romanian leu were weaker against the euro.
“It is fair to assume that the markets remain in risk-off fashion and sale-off will still be dominated by CEE currencies,” Matys said.
The Turkish lira fell 0.7% against the dollar. The currency of the oil importing country also remains exposed to fluctuations in crude price just months after being hit by a currency crisis.
Although central banks in emerging markets were quick to raise interest rates long before the start of tightening cycles in the developed worldanalysts now fear that a rate rise in the US Federal Reserve (Fed) will further strengthen dollar and potentially hurt market currencies (ME).
Markets have so far priced in a slower one pace of rate rises from the fed this year, with hike next week considered a fait accompli.
gold price sky-exploded past the $2,000 level for the first time in 1-1/2 years in the middle of a plus grand appetite for paris refuges, help support the South African rand linked to commodities.
The MSCI gauge for emerging market shares slid 2.4%, while the Eastern European index capped on Friday with his worst week performance on record.
