Smoke is seen following a fire at Aramco facility in the eastern city of Abqaiq, Saudi Arabia. Photo: ReutersThe burst of political tension triggered by the strikes on Saudi Arabia’s oil facilities has presented another conundrum for emerging-market traders.
Fresh from their longest rally in 20 months, many currencies foundered after the weekend drone attack on the Saudi Aramco
installations led Riyadh to halve production — cutting roughly 5 per cent of global supply — prompting the biggest intraday jump in crude prices on record.
The Indian rupee, Turkish lira and South African rand were among the worst-hit, while MSCI’s index of emerging stocks ended a three-day winning streak.
The conflagration added a fresh layer of complexity to a market that was last week taking heart from signs of a US-China truce on trade and expectations that central banks will ratchet up stimulus to stem the global economic slowdown.