| LONDON, March 13
LONDON, March 13 The Indian rupee hit 15-month
highs on forward markets on Monday after regional elections
confirmed the government's grip on power, while other emerging
market currencies also firmed as the dollar and U.S. yields
slipped from multi-week highs.
Markets have priced in an U.S. interest rate rise when the
Federal Reserve meets this Wednesday, a view cemented by robust
U.S. jobs data on Friday. MSCI's main emerging equity index rose
one percent to one-month highs, tracking world stocks
which cheered signs of a stronger U.S. economy.
"The run-up to the Fed in terms of emerging market reaction
is not dramatic anymore given that the market is basically
pricing in a near 100 percent probability of a hike in March, so
the market is already positioned for the outcome," said Cristian
Maggio, head of EM strategy at TD Securities.
Many emerging currencies firmed as the dollar slipped to
two-week lows against a currency basket. The Indian rupee
was boosted by a weekend regional election win for Prime
Minister Narendra Modi's pro-business ruling party, with many
seeing the result as providing a green light for more reform.
While Indian markets were shut for a holiday, the rupee
climbed to four-month highs in offshore trade while it
rose around 0.5 percent in non-deliverable forward markets (NDF)
with three-month NDFs hitting 15-month highs.
"This will strengthen PM Modi's position and give him the
political capital to press ahead with reforms. The results
should be positive for Indian assets and the rupee near term,"
Commerzbank analysts told clients.
The laggards of the day were the Russian rouble and Turkish
lira, the former pushed down by an oil price retreat and the
latter hit by tensions between Ankara and various European
The lira slipped 0.3 percent and Turkish stocks fell half a
percent as the government summoned the Netherlands'
envoy to complain about what it called a "disproportionate"
Dutch police response to pro-Turkey protests in Rotterdam.
Earlier President Tayyip Erdogan called the Netherlands a
"banana republic", stepping up anti-European rhetoric before an
April referendum on increasing his powers.
The political row overshadowed data showing a narrowing of
Turkey's current account deficit and attention now is on
Thursday's central bank meeting after it signalled it may
tighten policy further if needed.
Its main funding rate currently stands at 10.8 percent, the
highest since 2012.
"The (central bank) has to be very mindful how the market is
trading the lira, there is still a big net short position from
the corporate sector against the dollar," Maggio said.
Eastern European markets were broadly weaker, continuing to
price in a potential rise in euro zone interest rates from 2018,
as signalled by the European Central Bank last week. The Polish
zloty slipped to six-week lows to the euro.
In bond news, Kuwait kicked off pricing on its long-awaited
five- and 10-year benchmark deal at 100 and 120 bps over
For GRAPHIC on emerging market FX performance 2017, see tmsnrt.rs/2e7eoml
For GRAPHIC on MSCI emerging index performance 2017, see tmsnrt.rs/2dZbdP5
Emerging Markets Prices from Reuters
Equities Latest Net Chg % Chg % Chg
Emrg Mkt Indx 936.12 +9.98 +1.08 +8.56
Czech Rep 983.54 +11.23 +1.15 +6.72
Poland 2221.07 +21.04 +0.96 +14.02
Hungary 32731.53 +4.29 +0.01 +2.28
Romania 7895.23 +1.14 +0.01 +11.44
Greece 648.83 +0.24 +0.04 +0.81
Russia 1061.36 +5.43 +0.51 -7.89
South Africa 44475.26 +170.95 +0.39 +1.31
Turkey 89323.22 -288.19 -0.32 +14.31
China 3237.02 +24.26 +0.76 +4.30
India 28946.23 +17.10 +0.06 +8.71
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 27.00 27.00 +0.00 +0.02
Poland 4.34 4.34 -0.13 +1.43
Hungary 312.49 312.71 +0.07 -1.17
Romania 4.55 4.54 -0.14 -0.32
Serbia 123.79 123.67 -0.10 -0.36
Russia 59.06 58.86 -0.34 +3.74
Kazakhstan 318.06 316.76 -0.41 +4.90
Ukraine 26.87 26.72 -0.56 +0.48
South Africa 13.11 13.15 +0.33 +4.77
Kenya 102.50 102.50 +0.00 -0.13
Israel 3.66 3.67 +0.42 +5.34
Turkey 3.74 3.73 -0.19 -5.60
China 6.91 6.91 -0.05 +0.50
India 66.17 66.53 +0.55 +2.69
Brazil 3.14 3.14 -0.00 +3.67
Mexico 19.55 19.60 +0.26 +5.97
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 332 1 .05 7 57.38 1
All data taken from Reuters at 09:23 GMT. Currency percent
change calculated from the daily U.S. close at 2130 GMT.
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see)
(Additional reporting by Karin Strohecker; Editing by Catherine