EMERGING MARKETS-FX dips after Fed outlook, stocks edge up

  • Reuters
  • Stock Market News
EMERGING MARKETS-FX dips after Fed outlook, stocks edge up
Credit: © Reuters.

* U.S. Federal Reserve left borrowing costs untouched on Wednesday

* Fed Chair Jerome Powell's comments support the dollar

* Most EM currencies weaken marginally

* Investors expect a Czech rate hike later in the day

By Aaron Saldanha

May 2 (Reuters) - Emerging-market currencies weakened against the dollar on Thursday after U.S. Federal Reserve Chairman Jerome Powell said he saw no reason for a change in interest rates.

Powell's comments on Wednesday led foreign-exchange markets to dial back some of their bets that U.S. rates would fall by the end of the year. His remarks came after Wednesday's Fed meeting left rates unchanged, as expected. FRX/ night was a bit of a hawkish twist -- the idea that Powell saw downward inflationary pressure as a transitory effect definitely caught markets by surprise," said Simon Harvey, an analyst at Monex Europe.

MSCI's index of emerging-market currencies .MIEM00000CUS dipped 0.1 percent. Its developing-world stock index .MSCIEF moved as far in the other direction.

South Africa's rand ZAR= weakened while South African stocks .JTOPI rose 0.3 percent on gains among health care stocks and financials. lira TRY= was down 0.1 percent and on course for its lowest close in nearly seven months. Turkish stocks .XU100 rose 0.6 percent, mainly on gains by financials and industrials.

India's rupee INR= rose, helped by a half-percent fall in Brent futures LCOc1 . O/R . India is a net oil importer.

Russia's rouble RUB= softened 0.4 percent, while equities .IMOEX gained 0.6 percent, with Sberbank's common shares SBER.MM rising about 1 percent.

Hong Kong stocks .HSI rose 0.8 percent. Mainland China's markets were closed for the Labour Day holiday.

In emerging Europe, the Czech crown EURCZK= slipped 0.1 percent against the euro, after a report that local manufacturing sentiment in April was the weakest since 2012. Czech central bank is expected to raise its main interest rate to 2 percent later in the day, ending a recent pause in a two-year tightening cycle undertaken to tame domestic inflation pressures. stocks .PX rose 0.8 percent as they recovered from Tuesday's close, the lowest in a month and a half. That loss came amid talk about introducing new taxes. TOP NEWS across emerging markets CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB

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