Argentina devalued the peso, allowing it to plunge the most in 12 years, and Turkey’s lira tumbled to a record as the emerging-market currency selloff deepened amid slowing growth and rising social tension.
U.S. stocks slumped, with the Dow Jones Industrial Average sliding to the lowest close in a month, while Treasuries rose after a gauge signaled contraction in Chinese manufacturing. Emerging-markets equities slipped and the dollar retreated while gold and natural gas climbed.
The worst selloff in emerging-market currencies in five years is beginning to reveal the extent of the fallout from the Federal Reserve’s tapering of monetary stimulus, compounded by political and financial instability.
The biggest losers from oil’s rise above $120 a barrel are Turkey, South Korea, India and Sri Lanka as higher energy costs widen trade deficits and boost inflation, according to strategists at the largest banks.