EMERGING MARKETS-Rare "pure" EM sell-off sends currencies sprawling

  • Reuters
  • Stock Market News
EMERGING MARKETS-Rare "pure" EM sell-off sends currencies sprawling
Credit: © Reuters.

By Karin Strohecker

LONDON, July 5 (Reuters) - Top emerging market currencies dropped on Wednesday as worries about the South African central bank's cherished independence highlighted nerves about higher global borrowing costs.

A more than 3 percent slump in oil compounded matters, but it was the more than 2 percent slump in South Africa's rand ZAR= that did the most damage, following reports that the ruling African National Congress had agreed at its party conference that the central bank should be nationalised. latest falls saw the currency of Africa's most industrialised nation plumb lows it had last hit in mid-June when a row over the bank's mandate had also rattled markets just as the economy fell back into recession.

Investors' nerves were tested further as Russia's rouble RUB= fell 1 percent on its third straight day of losses, Turkey's lira slumped 1.5 percent and Mexico's peso led Latin American currencies lower as it dropped as much as 1.3 percent MXNUSD=R .

"The emerging markets' fish tend to swim together, and that is what is happening today," said John Hardy, head of FX strategy at Saxo Bank.

Adding to strains were expectations about the minutes of the last U.S. Federal Reserve meeting due for release later in the day.

They will be scrutinised to see how much appetite there is for further rate hikes or for signs of more concern among policymakers about a downturn in U.S. inflation and growth. FED

A shift towards more hawkish language by several major central banks has dominated the past week and left markets unsure of how much longer emergency stimulus in Europe will continue to support global asset prices.

"It is unusual because we are not seeing a sell-off across G10 markets, bond markets are stable, equity markets are stable," said Guillaume Tresca, senior emerging market strategist at Credit Agricole (PA: CAGR ).

"It is a pure emerging markets sell-off and that is surprising."

In Pakistan, analysts said the country had effectively devalued the currency after the central bank said a sudden 3 percent weakening of the rupee PKR= would help the country's external account and shore up economic growth. SPARED

Emerging assets elsewhere enjoyed a better session.

MSCI's emerging stock index bounced 0.2 percent after its biggest fall in nearly three weeks.

Bourses in the Gulf also recovered ahead of a meeting of foreign ministers of four Arab states in Egypt to consider further sanctions against Doha over accusations it was aiding terrorism and courting regional rival Iran.

Qatar's stock market index .QSI rose 0.4 percent while Kuwait stocks .KWSE advanced 0.5 percent. However, Riyadh's bourse .TASI fell 0.4 percent, extending the previous day's sharp fall. the market close, the ministers expressed disappointment with what they called Qatar's "negative" response to their demands, but did not announce new sanctions. 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 ) Equities

Latest

Net Chg % Chg % Chg

on year

Morgan Stanley (NYSE: MS )

Emrg Mkt Indx .MSCIEF 1008.68

+1.96 +0.19 +16.98

Czech Rep

.PX

986.78

+5.51 +0.56 +7.07

Poland

.WIG20

2307.49 +13.22 +0.58 +18.46

Hungary

.BUX

35298.14 +408.58 +1.17 +10.30

Romania

.BETI

8142.40 +213.73 +2.70 +14.92

Greece

.ATG

841.34 +15.45 +1.87 +30.72

Russia

.IRTS

1008.37

-9.22 -0.91 -12.49

South Africa

.JTOPI 46241.44 +421.56 +0.92 +5.33

Turkey

.XU100 00744.45 -463.34 -0.46 +28.93

China

.SSEC

3207.08 +24.28 +0.76 +3.33

India

.BSESN 31245.56 +35.77 +0.11 +17.35

Currencies

Latest

Prev

Local

Local

close currency currency

% change % change

in 2017

Czech Rep

EURCZK=

26.09

26.13 +0.16

+3.52

Poland

EURPLN=

4.24

4.24 -0.02

+3.94

Hungary

EURHUF= 308.34

307.79 -0.18

+0.16

Romania

EURRON=

4.59

4.58 -0.13

-1.16

Serbia

EURRSD= 120.31

120.70 +0.32

+2.53

Russia

RUB=

60.05

59.41 -1.08

+2.02

Kazakhstan

KZT=

324.56

322.66 -0.59

+2.80

Ukraine

UAH=

26.11

26.04 -0.25

+3.43

South Africa ZAR=

13.39

13.18 -1.57

+2.53

Kenya

KES=

103.70

103.70 +0.00

-1.28

Israel

ILS=

3.51

3.51 +0.09

+9.75

Turkey

TRY=

3.61

3.56 -1.43

-2.31

China

CNY=

6.80

6.80 -0.01

+2.11

India

INR=

64.80

64.78 -0.03

+4.86

Brazil

BRL=

3.32

3.31 -0.25

-1.94

Mexico

MXN=

18.33

18.20 -0.71 +13.01

Debt

Index Strip Spd Chg %Rtn Index

Sov'gn Debt 11EML EMBIG 329

5

.19 7 82.40 1

All data taken from Reuters at 15:50 GMT. Currency percent change calculated from the daily U.S. close at 2130 GMT.

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