EMERGING MARKETS-Dollar strength pressures emerging currencies, lira worst hit

  • Reuters
  • Stock Market News
EMERGING MARKETS-Dollar strength pressures emerging currencies, lira worst hit
Credit: © Reuters.

By Claire Milhench

LONDON, Dec 4 (Reuters) - Emerging equities rose from two-week lows on Monday helped by a key growth-boosting U.S. tax overhaul, but currencies fell against the stronger dollar, led by the Turkish lira under pressure from rising inflation.

MSCI's benchmark emerging stocks index .MSCIEF rose 0.5 percent, ending three straight days of losses. Both South Korean .KS11 and Indonesian .JKSE stocks rose over 1 percent, whilst Chinese blue chips gained 0.5 percent .CSI300 .

The moves reflected a broad-based rally in global equity markets following the U.S. Senate's approval of a tax overhaul on Saturday, which investors hope will ultimately boost corporate earnings and growth. Turkish banks .XBANK , which have been under pressure due to worries about potential U.S. fines, bounced 1 percent, with the broader Turkish stock market up 0.5 percent .XU100 .

"People are pleasantly surprised by the Senate passage of the U.S. tax bill, which is pushing up short-term interest rates and U.S. growth expectations," said Koon Chow, an emerging markets strategist at UBP. "This is good for equities globally, but not so good for currencies relative to the dollar."

The dollar firmed 0.3 percent .DXY , adding to headwinds for emerging currencies such as the lira, which plumbed record lows in November.

The lira TRY= weakened 0.25 percent after data showing inflation spiked to 12.98 percent in November, the highest in 14 years. Turkish assets have also been in the firing line due to an ongoing U.S. court case which has raised tensions between Ankara and Washington. said its monthly survey showed investors had sharply cut lira overweight positions in November, while the fall in Turkish local debt positioning was larger than in any other surveyed market.

Expectations are mounting that the central bank will act at its Dec. 14 meeting to put a floor under the tumbling lira and tame inflation. Chow predicted a rate rise of around 100 basis points.

The South African rand ZAR=D3 was one of the few currencies to firm, up 0.4 percent on indications that Deputy President Cyril Ramaphosa was doing well in nominations to become the next leader of the ruling ANC party. is seen as more business-friendly than rival candidate Nkosazana Dlamini-Zuma.

In the Gulf, Qatar stocks .QSI bounced over 2 percent to near one-month highs on hopes that Doha can resolve its diplomatic dispute with four other Arab countries at a summit this week. stocks .TASI were trading at almost two-month highs after jumping 1.2 percent on Sunday, and Abu Dhabi shares gained 1 percent .ADI .

In emerging Europe, the Polish zloty EURPLN= firmed 0.2 percent against the euro. The Polish central bank is expected to keep interest rates on hold at a record low of 1.5 percent at its Tuesday meeting despite a rise in inflation coupled with robust economic growth. 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

Equities

Latest

Net Chg % Chg % Chg

on year

Morgan Stanley (NYSE: MS )

Emrg Mkt Indx .MSCIEF 1122.07

+6.13 +0.55 +30.13

Czech Rep

.PX

1066.72

+2.74 +0.26 +15.75

Poland

.WIG20

2380.48

-9.44 -0.39 +22.21

Hungary

.BUX

37844.45 -344.36 -0.90 +18.25

Romania

.BETI

7791.69

-4.52 -0.06 +9.97

Greece

.ATG

752.54

+3.88 +0.52 +16.92

Russia

.IRTS

1127.60

-5.73 -0.51 -2.15

South Africa

.JTOPI 53040.34 +151.98 +0.29 +20.82

Turkey

.XU100 04164.79 +605.81 +0.58 +33.31

China

.SSEC

3310.37

-7.25 -0.22 +6.66

India

.BSESN 32867.52 +34.58 +0.11 +23.44

Currencies

Latest

Prev

Local

Local

close currency currency

% change % change

in 2017

Czech Rep

EURCZK=

25.57

25.54 -0.13

+5.61

Poland

EURPLN=

4.21

4.21 +0.13

+4.67

Hungary

EURHUF= 313.17

313.74 +0.18

-1.39

Romania

EURRON=

4.63

4.63 -0.06

-2.07

Serbia

EURRSD= 119.20

119.07 -0.11

+3.48

Russia

RUB=

58.93

58.87 -0.10

+3.96

Kazakhstan

KZT=

332.81

331.25 -0.47

+0.25

Ukraine

UAH=

27.17

27.08 -0.33

-0.63

South Africa ZAR=

13.69

13.69 +0.05

+0.32

Kenya

KES=

103.00

102.90 -0.10

-0.61

Israel

ILS=

3.49

3.48 -0.26 +10.21

Turkey

TRY=

3.92

3.91 -0.26 -10.09

China

CNY=

6.62

6.61 -0.04

+4.93

India

INR=

64.36

64.51 +0.24

+5.57

Brazil

BRL=

3.26

3.26 +0.00

-0.15

Mexico

MXN=

18.64

18.62 -0.09 +11.13

Debt

Index Strip Spd Chg %Rtn Index

Sov'gn Debt 11EML EMBIG 313

-2

.01 8 03.71 1

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