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Stocks gain for third straight session, up 1.4%
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S.Africa utility Eskom increases rolling blackouts to stage 4
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Polish c.banker says rates could be hiked by 100 bps in Nov -ISB
By Bansari Mayur Kamdar
Oct 18 (Reuters) – Emerging market currencies nudged higher on Tuesday after a subdued start to the week, underpinned by a softer dollar and improved risk sentiment after a dramatic U-turn in British fiscal policy.
The U.S. dollar gave up some from its recent gains, with the index that measures the greenback against six major peers slipping to its lowest in nearly 1-1/2 weeks, boosting regional currencies.
South Africa’s rand strengthened 0.4% against a weaker dollar. The volatile rand tends to rally at times of global investor optimism, when the relatively high yields it offers make it an attractive carry trade.
Curbing gains in the rand, South African state utility Eskom ramped up scheduled power cuts after generators at five of its plants broke down overnight.
Overall, MSCI’s index of emerging market currencies gained 0.2%, while the stock index rose 1.4%, extending its rally to third session.
China’s blue-chip CSI 300 Index edged lower as market participants kept a close eye on the ruling Communist Party’s twice-a-decade congress this week, while the on-shore yuan was little changed, helped by a steady midpoint fixing and supportive policies.
Central and eastern European currencies slipped in early trading, with the Polish zloty leading losses against the euro.
Poland still has plenty of room for interest rate rises, and a hike by 100 basis points might be needed in November to make monetary policy more effective, central Banker Joanna Tyrowicz was quoted as saying by news agency ISB.
In October, the National Bank of Poland (NBP) opted to leave borrowing costs unchanged despite soaring inflation, as it warned of an approaching economic slowdown.
“We don’t think the Polish central bank will be as aggressive as the Hungarian central bank and hence we are also more bearish on the Polish zloty than we are on the Hungarian forint,” said Jakob Christensen, head of global macro research at Danske Bank.
Many central banks in the region had started to wind down their rate hikes even when inflation was rising. However, they are jumping back into action as currencies take a beating.
On Friday, Hungary’s central bank unexpectedly increased interest rates and said it would provide foreign currency from its reserves to pay for the country’s surging energy imports in an emergency move to shore up the battered forint.
The Hungarian forint slipped 0.1% against the euro after three days of sharp gains.
Elsewhere, Turkey’s lira edged lower against the dollar, while the Russian rouble was steady as month-end tax payments offered support amid jitters over the possibility of fresh Western sanctions against Moscow. For GRAPHIC on emerging market FX performance in 2022, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2022, see https://tmsnrt.rs/2OusNdX
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For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see (Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Subhranshu Sahu)
