EMERGING MARKETS-South African rand rises with eyes on cbank rate decision, other FX slide

  • Reuters
  • Stock Market News
EMERGING MARKETS-South African rand rises with eyes on cbank rate decision, other FX slide
Credit: © Reuters.

* South African central bank expected to hold rates steady

* MSCI emerging market currency index slips to two-week low

* Developing world stocks hit lowest level so far in 2021

* Turkey's weekly forex reserves data due later in the day

By Sagarika Jaisinghani

March 25 (Reuters) - The South African rand firmed on Thursday ahead of a central bank policy decision on interest rates, while other emerging market currencies and stocks slipped for a fifth straight day on fears of a potential global tightening in monetary policy.

The rand ZAR= was up about 0.2% against the dollar, rising for the first time in four days as the spillover from a central bank shake-up in Turkey faded. ZAR/

South Africa's Reserve Bank (SARB) is expected to keep its repo rate at a record low of 3.5%, particularly as data on Wednesday showed the domestic consumer inflation rate dipped below its target range in February. assume that the rate vote will confirm the SARB's foresighted and stability-orientated course, so we do not expect significant momentum for the rand on this front," Elisabeth Andreae, FX analyst at Commerzbank (DE: CBKG ), wrote in a note.

A basket of emerging market stocks .MSCIEF slid to its lowest level this year, with Chinese .CSI300 .SSEC and Hong Kong .HSI equities slipping as the U.S. securities regulator moved to impose measures that could de-list some Chinese firms from U.S. exchanges. .SS

The MSCI index of developing world currencies .MIEM00000CUS fell about 0.2% to a two-week low as expectations of stronger U.S. economic growth, rising U.S. bond yields and new COVID-19 lockdowns in Europe lifted the dollar. FRX/

"A stronger dollar will dampen demand for emerging markets commodities and make their dollar-denominated debt challenging to service, especially with rising longer-term interest rates," said Hussein Sayed, chief market strategist at FXTM.

"So far, this risk seems insignificant but another sharp spike in yields and the dollar will increase the probability of a sovereign debt crisis in the EM world."

The Turkish lira TRY= eased about 0.6% after slumping 7.5% on Monday after President Tayyip Erdogan replaced a hawkish central bank governor with a critic of high interest rates, sparking fears of a reversal of rate hikes that had revived the currency amid Turkey's depleted forex reserves.

The central bank is due to release its weekly data on forex reserves at 1130 GMT, although the figures cover the week ended March 20, before the market turmoil from the latest central bank shake-up.

The Russian rouble RUB= rebounded 0.8%, supported by local tax payment requirements, after hitting its lowest so far this year on Wednesday on fears of new U.S. sanctions. RU/RUB

Later in the day, eyes will be on Mexico's central bank policy meeting, with signs of quickening inflation raising expectations that the bank will hold interest rates. The Mexican peso MXN= was up about 0.1% against the dollar on Thursday.

For GRAPHIC on emerging market FX performance in 2021, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2021, see https://tmsnrt.rs/2OusNdX

For TOP NEWS across emerging markets CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Turkey's turmoil

https://tmsnrt.rs/39dyBoM

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Add Chart to Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

Error: File type not supported

Drop an image here or

100
Please try another search