Ruble, Mexican Peso Slide as Crude Plunges Below Zero: Inside EM

(Bloomberg) -- The Russian ruble and Mexican peso tumbled Monday as oil futures plunged below zero for the first time.

The unprecedented sell-off hammered other commodity-sensitive currencies, including Brazil’s real and Colombia’s peso. Meantime, Petroleos Mexicanos bonds slid after Moody’s Investors Service slashed its rating to junk on Friday. MSCI’s emerging-market equity index also sank as stocks from Qatar to Saudi Arabia and Brazil declined.

The oil rout hasn’t been halted by a production-cut deal struck a week ago between OPEC, Russia, Mexico and other producers, as global stay-at-home orders imposed to stop the spread of the coronavirus torpedo demand. In a chaotic trading session Monday, the price for May contracts wiped out all their value, breaking every low for oil prices since 1946. The exchange where WTI futures trade said the contract would be allowed to price below zero.

“Lower oil prices in the U.S. and still low prices for Brent will continue to hinder emerging-market growth recovery,” Guillaume Tresca, a senior strategist at Credit Agricole SA in Montrouge, France, wrote in a report. “It could put a floor on the ruble’s recovery.”

Markets:

• MSCI EM Stock Index fell 0.3% to 898.5 points
• MSCI EM Currency Index dropped 0.1%
• Bloomberg Dollar Spot Index rose 0.4%
• Brent Crude tumbled 6.6% to $26.24
• UST 10-year yield declined 2.85 basis points to 0.61%

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