EMERGING MARKETS-EM currencies slip ahead of Fed, China data lifts stocks

The lira has weakened more than 9% this year after a near-37% slide in 2023, further stoking import prices. The MSCI's gauge of EM equities rose 0.4%, with Shanghai closing up about 1% after numbers showed China's factory output and retail sales beat expectations in the January-February period, marking a solid start for 2024 and offering some relief to policymakers.

Most emerging market currencies slipped on Monday as the dollar steadied ahead of the U.S. Federal Reserve's policy decision this week, while China led gains in developed world stock markets after upbeat economic data.

The Russian rouble was an exception in currency markets, firming 1% to 91.8 against the dollar and bouncing off a three-month low versus the euro. President Vladimir Putin won a record post-Soviet landslide in Russia's election on Sunday, cementing his already tight grip on power in a victory he said showed Moscow had been right to stand up to the West and send its troops into Ukraine.

The rouble had weakened steadily in the week leading up to the election, but the ultimate impact on the Russian market was limited. Overall, with the dollar trading near two-week highs against major peers, the Turkish lira fell to a record low of 32.39 per dollar and the South African rand slipped.

Most EM currencies have struggled this year after a strong 2023 as investors grapple with uncertainty around when U.S. interest rates will start falling as data points to a resilient U.S. economy. Recent inflation data prompted investors to pare bets of quick and big rate cuts from the Fed this year. The focus on Wednesday will be on whether Fed policymakers change their projections of rate cuts for the year.

"The chart of expectations will be closely scrutinised for any more conservative tweaks, which could spark negative sentiment," Susannah Streeter, head of money and markets, Hargreaves Lansdown, said. Central banks in Britain, Australia, Norway, Switzerland, Mexico, Brazil and Indonesia are due to meet this week, with most expected to stand pat on rates.

The Turkish central bank's policy decision is due on Thursday amid growing calls for a rate hike after data showed annual inflation rate climbed to 67% in February, exceeding economists' expectations. The lira has weakened more than 9% this year after a near-37% slide in 2023, further stoking import prices.

The MSCI's gauge of EM equities rose 0.4%, with Shanghai closing up about 1% after numbers showed China's factory output and retail sales beat expectations in the January-February period, marking a solid start for 2024 and offering some relief to policymakers.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)