EMERGING MARKETS-Turkish lira firms, emerging stocks struggle
By Claire Milhench
LONDON, July 23 (Reuters) - The Turkish lira firmed on Monday after comments from the finance minister cemented expectations of an interest rate hike this week, but emerging equities struggled in the face of new trade war threats.
The lira TRY= rose 0.8 percent against the U.S. dollar, leading emerging currency gains, ahead of Tuesday's central bank meeting. Markets expect rates to rise 100-125 basis points after inflation hit a 14-year high in June. expectations were strengthened when finance minister Berat Albayrak was quoted as saying that Turkey would not fight with markets but pursue a "win-win" relationship with them. strategist Piotr Matys said Albayrak's comments were "constructive", highlighting his defence of central bank independence and economic reforms.
But he warned Albayrak would have to follow these positive comments with concrete measures, "and if that happens then confidence amongst investors should be gradually restored".
Matys expects a 100-basis-point rise to 18.75 percent but warned that if Turkey held rates, that would be a negative signal, reigniting concerns about central bank independence.
These concerns had intensified after Turkey's President Tayyip Erdogan made his son-in-law treasury and finance minister. Erdogan has repeatedly called for lower interest rates so Albayrak is being watched to see if he will take a more orthodox line.
Turkish stocks .XU100 also rose, gaining 1.4 percent to hit a two-week high while the banking sector .XBANK rallied 2.3 percent.
Sentiment towards emerging assets remained subdued, however, following threats from U.S. President Donald Trump on Friday to impose tariffs on all $500 billion of imported goods from China. yuan CNH= retreated 0.4 percent in offshore markets, though Chinese mainland stocks .CSI300 .SSEC bounced about 1 percent, with investors relieved that new draft rules on banks' wealth management products were unlikely to crimp liquidity. Rusal's Hong Kong-listed shares 0486.HK leapt almost 15 percent to a 3-1/2-month high after the U.S. Treasury said it was open to removing the aluminium producer from the U.S. sanctions list. shares .IMOEX rose 0.7 percent and the rouble RUB= firmed 0.6 percent, underpinned by oil prices hurdling $73 LCOc1 a barrel. O/R For GRAPHIC on emerging market FX performance 2018, see http://tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2018
Latest
Net Chg % Chg % Chg
on year
Morgan Stanley (NYSE: MS )
Emrg Mkt Indx .MSCIEF 1070.44
+0.37 +0.03 -7.60
Czech Rep
1087.07
+2.10 +0.19 +0.83
Poland
2203.44 +20.52 +0.94 -10.47
Hungary
35377.42 +190.90 +0.54 -10.16
Romania
7966.70 +68.61 +0.87 +2.75
Greece
756.10
+1.74 +0.23 -5.77
Russia
1130.56 +15.97 +1.43 -2.07
South Africa
.JTOPI 50215.67 -688.53 -1.35 -4.41
Turkey
.XU100 95366.88 +1284.55 +1.37 -17.31
China
2859.52 +30.25 +1.07 -13.54
India
.BSESN 36561.69 +65.32 +0.18 +7.35
Currencies
Latest
Prev
Local
Local
close currency currency
% change % change
in 2018
Czech Rep
EURCZK=
25.86
25.85 -0.03
-1.27
Poland
EURPLN=
4.32
4.32 -0.03
-3.31
Hungary
EURHUF= 325.69
325.14 -0.17
-4.65
Romania
EURRON=
4.65
4.65 -0.06
+0.52
Serbia
EURRSD= 117.92
117.81 -0.09
+0.41
Russia
RUB=
63.09
63.42 +0.52
-8.61
Kazakhstan
KZT=
345.56
346.56 +0.29
-3.69
Ukraine
26.43
26.43 +0.00
+6.49
South Africa ZAR=
13.48
13.39 -0.63
-8.30
Kenya
KES=
100.65
100.60 -0.05
+2.43
Israel
ILS=
3.63
3.63 -0.08
-4.16
Turkey
TRY=
4.76
4.79 +0.73 -20.35
China
CNY=
6.78
6.77 -0.22
-4.05
India
INR=
68.72
68.73 +0.01
-7.12
Brazil
3.77
3.77 -0.03 -12.11
Mexico
19.07
19.02 -0.29
+3.01
Debt
Index Strip Spd Chg %Rtn Index
Sov'gn Debt 11EML EMBIG 360
0
.03 7 79.95 1
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