By Sujata Rao
LONDON, July 6 (Reuters) - Emerging currencies stayed on the back foot on Thursday after the previous day's slides, with South Africa's rand holding near seven-week lows due to a scare caused by proposals to nationalise the central bank and expropriate land.
Inconclusive U.S. Federal Reserve minutes kept the dollar near one-week highs and while some policymakers said weak inflation made them uncomfortable with the implied path of rate rises, expectations are that the Fed is moving steadily towards unwinding its balance sheet. currencies and equities took little solace from oil's 1 percent bounce with the rouble tumbling 0.7 percent against the dollar to the lowest level since January RUB= and MSCI's benchmark emerging equity index flat .MSCIEF after a lacklustre session in Asia.
JPMorgan (NYSE: JPM ) data showed an emerging currency index, the ELMI Plus, closing at a six-week low on Wednesday.
The rand fell 0.4 percent, extending the 1.6 percent slide driven by proposals at the conference of the ruling ANC to nationalise the respected central bank and expropriate land without compensation but also by the party's failure to agree any much-needed reforms. central bank calmed some nerves by stressing its independence was enshrined by the constitution regardless of ownership. But Commerzbank (DE: CBKG ) said the rand faced "uncertain times" reminding clients of proposals last month to change the central bank's mandate to include growth.
"The announcement does leave a bad taste. Even well before the parliamentary elections in 2019 this is likely to cause further concerns about the central bank's independence and its stability-orientated course," Commerzbank said.
Benchmark bond yields were near 2-1/2-month highs ZAR186= but the commodity-heavy bourse rose to one-month highs .JTOPI .
The Turkish lira, the emerging currency most vulnerable to higher U.S. interest rates, touched six-week lows, losing half a percent against the dollar TRY= .
Earlier in the day, most Asian currencies also weakened, led by the Korean won's 0.3 percent fall and the Philippine peso touching 11-year lows KRW= TWD=
Morgan Stanley (NYSE: MS ) said however that while Western central banks' stimulus unwind presented some risks to emerging markets, the latest moves were likely down to "position squaring" amid recovering growth and reasonable asset price valuations.
"We think this period of EM weakness will prove temporary and maintain a bullish medium-term view," the bank added.
Middle Eastern assets were steady after four Arab states decided not to immediately slap fresh sanctions on Qatar. Qatari stocks fell 0.6 percent .QSI but the riyal was flat in the spot as well as forward markets sovereign bond spreads over Treasuries narrowed one basis point but were at the highest in two weeks 11EMP .
For GRAPHIC on emerging market FX performance 2017, see http://tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2017, see http://tmsnrt.rs/2dZbdP5
For CENTRAL EUROPE market report, see CEE/
For TURKISH market report, see .IS
For RUSSIAN market report, see RU/RUB ) Emerging Markets Prices from Reuters
Net Chg % Chg % Chg
Emrg Mkt Indx .MSCIEF 1010.11
+0.26 +0.03 +17.15
+5.51 +0.56 +7.07
2321.21 +13.72 +0.59 +19.16
35543.33 +245.19 +0.69 +11.06
8174.23 +31.83 +0.39 +15.37
+0.04 +0.00 +30.72
-1.41 -0.14 -12.66
.JTOPI 46366.23 +124.79 +0.27 +5.61
.XU100 00772.13 +27.68 +0.03 +28.97
+5.38 +0.17 +3.51
.BSESN 31401.25 +155.69 +0.50 +17.93
close currency currency
% change % change
South Africa ZAR=
18.30 +0.26 +13.51
Index Strip Spd Chg %Rtn Index
Sov'gn Debt 11EML EMBIG 330
.02 7 82.32 1
All data taken from Reuters at 08:07 GMT.
Currency percent change calculated from the daily U.S.
close at 2130 GMT. (Editing by Toby Chopra)
Add Chart to Comment
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.