(Bloomberg) -- Emerging-market currencies tumbled on Monday after President Donald Trump said he would impose an additional 10% tariff on any country that aligns with “the Anti-American policies of BRICS” nations.
- Trump plans to announce trade deals and deliver tariff warnings on Monday, with US officials signaling that trading partners will have until Aug. 1 before the tariffs kick in
- An index for developing currencies is down 0.4%, its largest intraday decline in two weeks
- Andean currencies were some of the main laggards, with the Chilean shedding more than 1%, closely followed by the Colombian peso
- “The currencies of countries facing potential clashes with American interests are suffering. Tariffs will be used to encourage a certain way of doing business and exchange,” Juan Perez, director of trading at Monex USA
- The Brazilian real also fell, losing as much as 0.9%
- Donald Trump accused Brazil of politically persecuting Jair Bolsonaro, launching a strident defense of the right-wing former president
- “Clearly Brazil was off the radar and now with this BRICS meeting, Brazil is in Trump’s firing line. We have the risk of tariffs and some retaliation, as well as Trump’s clear support for Bolsonaro. USDBRL is responding to this,” said Daniel Balaban, a broker at XP Investments in New York
- MSCI’s emerging-market stock index also retreated
Top EM Stories:
- The dollar rose to its strongest level in over a week due to speculation that Donald Trump’s trade tariffs won’t hurt the US economy as badly as feared
- Turkey launched an investigation into the main opposition party’s leader and arrested more of its mayors, in a widening crackdown that’s likely to stoke investor anxiety over risks to the rule of law and political stability.
- JPMorgan Chase & Co. expects South African stocks to continue their rally in the second half, driven by an improving domestic economy and supportive monetary policy
- BNP Paribas Asset Management is bullish on Brazilian and Colombian bonds, expecting a softer dollar and domestic policy to support the notes despite global trade uncertainties.
- Indonesia, the world’s second-biggest wheat buyer, plans to purchase more wheat from the US as it seeks to secure a trade deal ahead of the looming tariff deadline.
Reporting by Jorgelina do Rosario and Nicolle Yapur
