Week dollar give boost to number of developing world currencies


Devdiscourse News Desk | Updated: 13-12-2018 15:39 IST | Created: 13-12-2018 15:27 IST
Week dollar give boost to number of developing world currencies
MSCI's index for emerging-market stocks rose for a third straight day, led by Chinese stocks, which were also buoyed by signs the trade war between Beijing and Washington was subsiding. (Image Credit: Twitter)

Expectations that China would step up support for its economy helped emerging-market stocks to reach a one-week high on Thursday. A weaker dollar boosted a number of developing-world currencies.

MSCI's index for emerging-market stocks rose for a third straight day, led by Chinese stocks, which were also buoyed by signs the trade war between Beijing and Washington was subsiding.

China made its first major U.S. soybean purchases in more than six months on Wednesday, evidence that China was living up to pledges made when Presidents Donald Trump and Xi Jinping agreed to a 90-day detente to negotiate a trade deal.

Chinese investors are also looking to the Central Economic Work Conference on policy, typically held in mid-December, for moves by Beijing to pump more money through a slowing economy.

"We have a brief window of calm here," said Chris Turner, global head of strategy and head of EMEA and LATAM research at ING. Easing concerns over Italy's budget and UK Prime Minister Theresa May's defeat of a no-confidence vote had also aided sentiment, he said.

"But perhaps it's a little bit too early to have confidence as investors are wary that suddenly dollar rates go higher again or Trump flips the switch on trade," he added.

Stock markets across Asia also gained. Mumbai's main indexes rose to their highest in more than a week, as banking stocks rallied on hopes liquidity would improve under a new central bank chief and after data showed inflation slowed in November.

Most emerging-market currencies gained as the dollar weakened, but the Turkish lira slipped before a central bank meeting. Policymakers are expected to hold rates at 24 per cent after inflation slowed more than expected in November.

After three months of solid gains, the lira is down nearly 3 per cent so far in December.

"Given the market's recent uneasiness about the risk of the central bank easing prematurely in 2019, a no change decision may lend some support to the lira," said Elsa Lignos, global head of FX strategy at RBC Capital Markets in a note.

The Turkish Treasury said on Wednesday it would start issuing euro- and U.S. dollar-denominated bonds next week to "diversify borrowing instruments and to broaden the investor base".

Russia's rouble rose along with oil prices and renewed interest in risk assets, but trading was light before a central bank meeting on Friday.

In Eastern Europe, Hungary's forint, the Polish zloty and the Czech crown were little changed against the euro, which edged higher before a European Central Bank meeting.

(With inputs from agencies.)

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