Financial markets around the world continued to react to the slide in the value of the Turkish lira, despite a series of measures being announced by the country's finance minister that were aimed at propping up the country's currency.
The euro hovered close to one-year lows against the American dollar and was trading at $1.1405 at 0210 BST as investors sought out the greenback as a safe haven. The euro had hit a 13-month low of $1.1365 in trading on Monday.
Fears over the Turkish economy also led to investors pulling money out from other emerging markets. Although the Turkish lira recovered slightly from the low of 7.23 to the $1 it was trading at over the weekend after finance minister Berat Albayek announced measures aimed at propping up the currency, including the promise of additional liquidity, plus measures to cut reserve requirements for Turkish banks, the lira gave up most of the gains it made following the announcement and was trading at just over 6.91 / $1 by 0442 BST on Tuesday morning.
"The Turkish lira remains volatile and it is too early to say the lira has settled down. For now, currencies will be driven by the Turkish lira," Yukio Ishizuki, a senior strategist at Daiwa Securities, told Reuters.
Argentina's currency also closed at a record low of 29.97 pesos per dollar on Monday as the wobble on emerging market currencies was compounded by a local corruption scandal. The peso dropped by 2.4 percent, despite the central bank hiking interest rates by 5 percentage points to 45 percent.
Asian markets recovered slightly in early trading on Tuesday after the emerging market currency scare failed to dent United States markets.
Japan's Nikkei gained 1 percent in early trading on Tuesday, while the MSCI index of Asia-Pacific shares outside Japan remained flat.
Declines in U.S. stockmarkets were limited on Monday, with the Dow Jones Industrial Average dropping by 0.5 percent, the S&P 500 index falling by 0.4 percent and the Nasdaq 0.25 percent.
David Hensley, an economist at JP Morgan, told Reuters that he expected strains experienced in Turkey and Argentina would not impact other emerging markets (EMs) too much.
"Negative developments in Turkey will likely be eventually seen, along with Argentina, as isolated given their exceptional external imbalances compared to most EM countries," he said.
"Nonetheless, we are mindful of political risk elsewhere in the EM involving Russia as well as Brazil, Mexico, and even India."
Middle East markets
The decline in value of the lira did impact Gulf markets, most notably bank stocks that have exposure to the Turkish market. In Dubai, the DFM index fell by 1.5 percent as stocks with exposure to Turkey were hit. Emirates NBD, which agreed a $3.2 billion deal in May to buy Turkey's Denizbank from Russia's Sberbank, saw its shares decline by 4.6 percent, while Emaar Properties, which has projects in Turkey, fell by 2.3 percent.
Qatar National Bank, which has about 15 percent of its assets and 14 percent of loans in Turkey, according to Arqaam Capital, saw its shares drop by 2.6 percent. Qatar Commercial Bank, which owns Turkey's Alternatifbank, fell by 0.6 percent. Overall, the Qatar index dropped 0.8 percent.
In Saudi Arabia, the Tadawul All Share Index fell by 2.4 percent, dragged down by its largest bank, National Commercial Bank, which also has exposure to Turkey. Its shares declined in value by 3.7 percent.
All of the other Gulf markets finished lower, with both the Kuwait and Abu Dhabi indices dropping 0.9 percent, Oman falling by 0.6 percent and Bahrain by 0.2 percent. The Egyptian Exchange also finished 1.4 percent lower.
A report from OPEC confirming that the world's biggest producer, Saudi Arabia, had cut production in July to avert concerns about a growing supply pipeline helped to edge oil prices higher.
Brent Crude one-month futures increased by 0.4 percent or 26 cents, to $72.87 per barrel at 0211 BST on Tuesday, and US West Texas Intermediate crude futures increased by 0.5 percent, or 32 cents, to $67.52 per barrel.
Gold prices recovered slightly in early trading on Tuesday, but remained close to 18-month lows as a result of the strengthening dollar.
Spot gold gained 0.1 percent to $1,194.13 an ounce at 0206 BST after hitting a low of $1191.35 on Monday, which was its lowest level since January 30, 2017. U.S. gold futures were up 0.1 percent at $1,200.5 an ounce.
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(Writing by Michael Fahy; Editing by Shane McGinley)
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