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Political risks shape emerging-currency markets

Uncertainty weighs in Turkey, South Africa; stability pays in India, Indonesia

The Turkish lira and South African rand have weakened in recent months as investors steer clear of political and diplomatic risk.

ISTANBUL -- As the U.S. and European central banks slowly tighten monetary policy, investors are growing pickier about emerging-market currencies, steering clear of countries with unsettled political climates.

Previous monetary easing in the U.S. and Europe after the 2008 financial crisis spurred a flood of money into emerging countries in search of higher returns. Bond and equity investment in these markets from December 2008 to the summer of 2017 totaled $2.35 trillion, data from the Institute of International Finance shows.

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