Most emerging market currencies rose on Monday, led by the South African rand and the Russian ruble, after the dollar fell from its 16-month high as investors waited for new clues about US monetary policy.
The ruble reaffirmed by 1.2% and was set for its best day in more than three weeks despite weakening oil prices. The currency had fallen sharply on Friday amid tensions between Russia and Ukraine that also hurt Russian bonds and stocks.
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The South African rand firmed around 1%, ahead of national inflation data and a South African Reserve Bank (SARB) monetary policy meeting scheduled for Thursday.
The SARB is expected to maintain its buyback rate at 3.50%.
The dollar fell from nearly a nearly 16-month high against major pairs as traders await new clues about the US economy after skyrocketing inflation figures prompted investors to advance their bullish bets of Federal Reserve rates.
The Turkish lira extended losses to a fifth straight session after breaking the psychological level of 10 per dollar on Friday. It reached its lowest level of 10.04 in early trading on Monday.
The Turkish central bank, at its next monetary policy meeting on Thursday, is expected to cut rates by another 100 basis points despite rising inflation, a move that would put further pressure on the currency.
“Turkey is hit by a perfect tightening storm from the Fed, a stronger dollar and higher oil prices. We have been very bearish on the lira because we don’t see policies to deal with economic pressures and, with them also cutting rates again, it is economic suicide, “said Jakob Christensen, head of emerging markets research at Danske Bank.
Turkey’s benchmark stock index rose 3.2% to record highs, led by gains from lender Garanti BBVA, which rose 10% after Spanish lender BBVA’s offer of € 2.25 billion ($ 2.58 billion). for a 50.15% stake that it does not own.
The MSCI emerging market equity index rose 0.3% in a sixth straight earnings session, its longest winning streak since early June. China’s upbeat industrial production and retail sales sentiment was offset by the beleaguered real estate sector. Mainland Chinese stocks lost, but this was offset by strong tech gains in Taiwan and South Korea.
South African beverage maker Distell Group Holdings fell more than 7% after Heineken’s 40.1 billion rand ($ 2.62 billion) offering represented a discount from Distell’s last shutdown.
The governor of the Central Bank of Poland, Adam Glapinski, said in an interview that rates are likely to rise, causing a 0.6% jump in the zloty against the euro. It had previously hit seven-month lows amid a migration crisis on its border with Belarus that has increased regional tensions.
Argentine markets were also in the spotlight after ruling Peronists suffered a setback in midterm elections over the weekend. Telecom Argentina’s price in Frankfurt fell 3.4%.