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EMERGING MARKETS-Emerging stocks rise, currencies mixed on tepid dollar
January 18, 2017 / 10:26 AM / 8 months ago

EMERGING MARKETS-Emerging stocks rise, currencies mixed on tepid dollar

LONDON, Jan 18 (Reuters) - Emerging stocks rose for a second day on Wednesday but currencies struggled to build on their gains in the wake of recent dollar weakness with South Africa’s rand and Turkey’s lira coming under renewed pressure.

MSCI’s emerging market index rose 0.5 percent, lifted by bourses in Asia hovering close to a three-month high and solid gains in other major markets such as Russia.

Currencies diverged after chalking up solid gains in the previous session when U.S. President-elect Donald Trump sent the dollar to multi-week lows, saying its strength against the Chinese yuan was “killing us”.

Trump - who will be inaugurated on Friday - had threatened previously to declare China a currency manipulator after taking office.

“In terms of Trump and the impact on emerging markets, the market is still trying to figure out what will happen. There are still a few more days before he is sworn in,” said Cristian Maggio, head of emerging markets strategy at TD Securities.

“China is a big player and Trump’s rhetoric so far has been quite aggressive against China. Currencies are bouncing back and forth, and the renminbi is not immune from these fluctuations.”

The onshore yuan gained 0.3 percent and traded at its strongest in two months, supported by a surge in onshore forwards on expectations of tighter liquidity over the long Lunar New Year holidays and by Beijing stepping up capital controls and tightening investment rules.

Russia’s rouble nearly matched those gains despite oil prices giving away early gains to weaken on the day.

But South Africa’s rand weakened 1 percent after data showed inflation accelerated in December while markets had expected it to slow.

“If that was a single print it wouldn’t be too much of a concern, but the reality is that since August inflation has been steadily on the rise,” said Maggio, adding this could force the central bank to hike rates.

“Where you have an economy that is struggling to gain traction, any additional rate hike will add to the negative developments. It may derail the recovery and it might compromise the government’s attempts to achieve a certain level of budget deficit.”

Turkey’s lira weakened 0.6 percent, despite the central bank not opening its repo auction while offering a form of swap transaction in its efforts to shore up the currency, which has lost nearly 7 percent since the start of the year.

Both countries are seen as vulnerable due to large external financing needs, and both have central bank policy meetings scheduled for next week.

Emerging Markets Prices from Reuters Equities Latest Net Chg % Chg % Chg

on year

Morgan Stanley Emrg Mkt Indx 898.21 +3.34 +0.37 +4.17

Czech Rep 921.86 -1.41 -0.15 +0.03

Poland 2017.39 +2.11 +0.10 +3.57

Hungary 32806.33 +24.07 +0.07 +2.51

Romania 7165.06 +2.77 +0.04 +1.13

Greece 643.98 +1.48 +0.23 +0.05

Russia 1161.01 +4.54 +0.39 +0.75

South Africa 46132.30 +87.29 +0.19 +5.08

Turkey 82498.33 +135.56 +0.16 +5.58

China 3113.05 +4.28 +0.14 +0.30

India 27273.31 +37.65 +0.14 +2.43

Currencies Latest Prev Local Local

close currency currency

% change % change

in 2017

Czech Rep 27.02 27.01 -0.02 -0.04

Poland 4.37 4.36 -0.20 +0.79

Hungary 307.92 307.02 -0.29 +0.29

Romania 4.49 4.50 +0.14 +0.89

Serbia 123.76 123.67 -0.07 -0.33

Russia 59.19 59.33 +0.24 +3.50

Kazakhstan 330.05 331.85 +0.55 +1.09

Ukraine 27.42 27.57 +0.55 -1.53

South Africa 13.57 13.46 -0.86 +1.16

Kenya 103.90 103.90 +0.00 -1.47

Israel 3.81 3.81 -0.12 +1.07

Turkey 3.78 3.76 -0.58 -6.74

China 6.83 6.85 +0.29 +1.62

India 68.01 67.85 -0.24 -0.10

Brazil 3.21 3.21 +0.00 +1.30

Mexico 21.61 21.50 -0.51 -4.14

Debt Index Strip Spd Chg %Rtn Index

Sov‘gn Debt EMBIG 350 -2 .02 7 52.81 1

All data taken from Reuters at 09:57 GMT. Currency percent change calculated from the daily U.S. close at 2130 GMT.

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 ) (Additional reporting by Claire Milhench; Editing by Richard Lough)

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