Currencies slide on virus woes, Russian rouble hits over 2-month low

The Russian rouble touched its lowest level in more than two months on Thursday, weakening along with most other emerging market currencies as record spikes in COVID-19 cases dashed optimism sparked overnight by a dovish US Federal Reserve.

The rouble tumbled as much as 1.5pc against the dollar to hit its lowest level since mid-May, while also touching its lowest since early April against the euro. South Africa's rand tumbled 1.3pc and was on track for its worst day in six weeks.

Surging coronavirus infections in Asia have dispelled any notion that the region may be over the worst, with Australia and India reporting record daily infections on Thursday, Vietnam fretting over a new spike and North Korea urging vigilance.

The United States and Brazil also reported a record number of new deaths and confirmed cases.

Optimism sparked by the Fed faded, even after the US central bank vowed to "do what we can, and for as long as it takes," to limit damage and boost growth. All eyes are now on the US Republicans and Democrats, struggling to reach a deal to provide more aid.

"The Fed's decision on this also appeared to be an acknowledgment that current events are likely to remain largely out of their hands...," said Michael Hewson, chief market analyst at CMC Markets UK.

Future Fed action would be dependent not only on the overall course of the virus, but also on any further fiscal action from US politicians, a factor which chair Jerome Powell made reference to in his post meeting press conference, Hewson added.

The Turkish lira showed some signs of steadying after four straight days of decline even as concerns lingered over depleted reserves and local demand for dollars.

Data showed Turkey's economic confidence index rebounded 11.8pc month-on-month in July to 82.2 points, a third month of recovery from lows caused by coronavirus curbs.

Stocks in the developing world fell 0.2pc, reversing gain made in early Asian trading, with Warsaw stocks leading declines.

Poland may reinstate quarantine measures for people returning home from some countries, a government spokesman said, after recent data showed a spike in coronavirus infections.

Johannesburg shares fell, with heavyweight diversified miner Anglo American shedding 1pc on halving its interim dividend and said first- half profits fell 39pc as lockdowns hit production.