LONDON Jan 4 Emerging market currencies broadly
strengthened on Wednesday but the Mexican peso touched its
lowest in nearly two months on fears U.S. President-elect Donald
Trump's policies will hurt the economy. Emerging market equities
held at three-week highs.
The peso slipped as much as 0.3 percent against the
dollar, its weakest since Nov. 11, when it fell to a record low.
Mexico's currency has been hit by signs that Trump's threats to
renegotiate NAFTA and punish U.S. companies that move production
outside the U.S. might be more than mere bluster.
On Tuesday, car maker Ford cancelled a planned $1.6
billion factory in Mexico following harsh criticism from Trump,
saying it will invest in a Michigan factory instead
Trump also appointed Robert Lighthizer as U.S. trade
representative. Lighthizer helped to stem the tide of imports
from Japan in the 1980s under President Ronald Reagan, with
threats of quotas and punitive tariffs.
"He has been a strong proponent of more restrictive trade
... that's bad news for Mexico for sure," said Per Hammarlund,
chief emerging markets strategist at SEB, adding that Trump's
proposed commerce secretary, Wilbur Ross, was also a hawk. "It
signals that Trump will take a very tough line when it comes to
The Turkish lira rose 0.5 percent against the dollar
from record lows on Tuesday. The lira has been pressured by
higher-than-expected inflation and by security worries after a
series of gun and bomb attacks. Overnight, Turkey's
parliament voted to extend emergency rule by three months
"The continuation of the state of emergency keeps a dampener
on business sentiment, given that [President Tayyip] Erdogan can
pretty much rule by decree," said SEB's Hammarlund. "The lira is
very vulnerable right now."
The benchmark emerging market equities index held
steady at three-week highs, helped by a strong performance in
Asia after a rally on Wall Street.
Investor sentiment was boosted by upbeat manufacturing
surveys from China, the euro zone and the United States. U.S.
factory activity rose to a two-year high as new orders surged
Chinese mainland shares rose 0.8 percent,
the Philippines index gained 2.5 percent and Thai stocks
rose 1.3 percent to their highest since April 2015.
European stocks delivered a more mixed performance. Russian
dollar-denominated stocks fell 1.7 percent - their
steepest daily loss in nearly eight weeks - even though oil
prices edged up after falling 2.4 percent on Tuesday.
South African stocks fell 1.2 percent, but the rand
gained 1.4 percent against a weaker dollar, underpinned
by a rally in precious metals.
The Chinese yuan also steadied, rising 0.2 percent
after Chinese state banks stepped in to support it for a second
day and the central bank set a stronger-than-expected daily
But the Malaysian ringgit continued to suffer,
briefly touching a 19-year low. It is considered vulnerable to
rises in U.S. interest rates because of the high foreign
ownership of Malaysian bonds.
The Institute for International Finance reported that
emerging market portfolios recorded the lowest total inflows
since 2008 in 2016 at $28 billion, with debt portfolios
suffering $33.8 billion of outflows.
For GRAPHIC on emerging market FX performance 2016, see tmsnrt.rs/2e7eoml
For GRAPHIC on MSCI emerging index performance 2016, see tmsnrt.rs/2dZbdP5
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see )
Emerging Markets Prices from Reuters
Equities Latest Net Chg % Chg % Chg
Emrg Mkt Indx 869.37 +0.93 +0.11 +0.82
Czech Rep 935.59 +2.73 +0.29 +1.52
Poland 1989.86 +0.22 +0.01 +2.15
Hungary 32368.21 +199.08 +0.62 +1.14
Romania 7167.42 +3.07 +0.04 +1.16
Greece 655.94 -0.67 -0.10 +1.91
Russia 1171.78 -17.54 -1.47 +1.69
South Africa 43739.37 -521.89 -1.18 -0.37
Turkey 76842.88 +224.68 +0.29 -1.66
China 3159.82 +23.90 +0.76 +1.81
India 26636.17 -7.07 -0.03 +0.04
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 27.02 27.01 -0.03 -0.04
Poland 4.39 4.39 +0.03 +0.42
Hungary 308.52 309.10 +0.19 +0.10
Romania 4.52 4.52 +0.05 +0.38
Serbia 123.39 123.33 -0.05 -0.03
Russia 60.87 60.93 +0.10 +0.65
Kazakhstan 334.00 333.33 -0.20 -0.10
Ukraine 26.75 27.00 +0.93 +0.93
South Africa 13.63 13.82 +1.43 +0.75
Kenya 103.20 102.70 -0.48 -0.80
Israel 3.85 3.86 +0.22 -0.05
Turkey 3.58 3.59 +0.43 -1.42
China 6.94 6.96 +0.22 +0.01
India 68.17 68.25 +0.13 -0.32
Brazil 3.26 3.26 +0.00 -0.34
Mexico 21.11 21.11 -0.01 -1.87
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 361 -1 .04 7 40.54 1