EMFX leading way to sudden stop?

Aggressive currency depreciations amongst the traditional higher beta EM currencies are the clearest indication yet that market participants are giving serious consideration to the potential of a sudden stop in current account financing. 

"Though in recent months EM currencies are used to weakening , the declines in recent days are startling. TRY illustrates a loss of nearly 4% in as many days, BRL's and ZAR's losses are closer to 6%", states Commerzbank. 

These losses are taking place in tandem with significant losses (i.e. higher yields) for local bonds. Such price action is reminiscent of the emerging market crises of old, when all asset classes underperformed at the same time as investors took flight. Interestingly, central banks remain quite sanguine (on the surface at least) and refrained from either verbal or real interventions. Perhaps there is a realization that spending precious FX reserves is akin to swimming against the tide. Nonetheless, from the current viewpoint, further aggressive currency weakness makes a sudden stop in current account financing almost a self-fulfilling prophecy, in the sense that any potential portfolio inflows are rendered impossible due to high FX volatility and the perceived potential for further FX losses. 

A glance at market micro structure indicates that liquidity is already getting thin, judging by the development of Bid-Ask spreads in various high beta FX pairs, which will get worse before it gets better, added Commerzbank.