FX hits 9-month high; Argentina in focus after Milei win -November 20, 2023 at 05:12 am EST
* Zambia bond prices drop after debt restructuring fallout
* China keeps lending benchmark rates unchanged
* Milei’s Argentina win expected to pressure peso, buoy
bonds
* FX up 0.5%; Stocks up 0.7%
Nov 20 (Reuters) – Emerging markets currencies gained on
Monday and hit a nine-month high, with developments in Argentina
– following far-right libertarian Javier Milei’s presidential
win – in focus, while Zambia’s debt restructuring efforts
faltered.
The MSCI’s basket of developing markets currencies
strengthened 0.5% to levels last seen in early
February as the greenback eased on optimism that U.S. rates have
peaked. Equities added 0.7%.
Analysts believe Milei’s strong win, coming in the midst of
a tense presidential election run-off, will likely put downward
pressure on the Argentinan peso, though it could play better
among bondholders.
“The news will be positive for bond prices and will generate
pressure on the official and parallel FXs,” said Bruno Gennari,
Argentina expert at KNG Securities.
That would have to wait, however, as markets in South
America’s second-largest economy will be closed on Monday on
account of a public holiday, though hard-currency bonds and some
equities in Europe and the U.S. will trade.
“The impact of Milei’s victory will be capped by the fact
that he will have limited legislative leverage to implement
economic reforms,” Gennari added.
U.S.-listed shares of some Argentine firms rallied in early
premarket trading with Anco BBVA Argentina up 5.4% and
Grupo Financiero Galicia up 9.6%.
In frontier markets, the prices of Zambia’s international
bonds dropped, as per
tradeweb data, after the government said a planned deal to
rework $3 billion of Eurobonds could not be implemented at this
time due to objections from official creditors, including China.
Meanwhile, China’s offshore yuan strengthened 0.6%
and hit a three-month high. The world’s second largest economy
left benchmark lending rates unchanged, matching expectations,
as a weaker yuan continued to limit further monetary easing and
policymakers waited to see the effects of previous stimulus on
credit demand.
Investors also kept an eye on crude prices that ticked
higher on expectations of oil-producing countries deepening
supply cuts to shore up prices.
Major oil exporter Russia’s rouble
strengthened 2.1%, nearing a more-than-four-month high, while
the currencies of major oil importers – Turkey and
India – inched lower.
Israel’s shekel was muted as the conflict with Hamas
raged on. U.S. and Israeli officials said a deal to free some of
the hostages held in Gaza was edging closer.
Currencies in eastern and central Europe, such as Hungary’s
forint and Czech’s crown were little changed
against the euro. Poland’s zloty strengthened 0.4%.
Romania’s leu inched 0.1% lower, ahead of the
release of the local central bank’s minutes of its monetary
policy decision delivered earlier in the month.
(Reporting by Johann M Cherian in Bengaluru; Editing by Janane
Venkatraman)
