| LONDON, April 5
LONDON, April 5 South Africa's rand came under
pressure on Wednesday, revisiting the sell-off triggered by
political turmoil and a ratings downgrade, while currencies
elsewhere broadly strengthened and emerging stocks rose to a
The rand lost 0.3 percent against the dollar in
volatile trading, but was still off the three-month lows it hit
on Tuesday in the wake of S&P Global Ratings cutting the
country's credit rating to 'junk'.
The downgrade followed the sacking of Finance Minister
Pravin Gordhan, which outraged opponents and business leaders
and deepened a rift within the ruling ANC party. South Africa's
biggest trade union has called on President Jacob Zuma to quit.
Inan Demir, senior emerging market economist at Nomura, said
there was room for further weakness in South African assets,
with Zuma's position not as weak as had been perceived.
"He is still in a strong position to stay in place and
implement his policies ... and these policies are likely to lead
to further credit downgrades and further weakness in the rand,"
Other South African assets have steadied. The average yield
spread of sovereign bonds over U.S. Treasuries on the JP Morgan
EMBI Global Diversified index fell 4 basis points (bps)
to 275 bps, after hitting a four-month high on Monday while
five-year credit default swaps narrowed.
The local benchmark government bond yield dropped
to 8.94 percent, after touching 9.2 percent on Tuesday.
A weaker dollar allowed other emerging currencies to
make gains, with the Turkish lira firming 0.2 percent and
the Russian rouble 0.3 percent. The latter was supported
by oil prices rising to near a one-month high after an
unplanned outage in the North Sea.
However, China's yuan slipped 0.2 percent against the
dollar as investors awaited a summit between U.S. President
Donald Trump and his Chinese counterpart Xi Jinping on Thursday
and Friday. Trade and security are expected to feature
The broader economic backdrop remained relatively benign,
and MSCI's benchmark emerging stocks index rose 0.4
percent to one-week highs, led by a strong performance in Asia
that was echoed in emerging Europe.
Taiwan stocks gained 1.4 percent lifted by an 8
percent surge in the shares of electronics company Hon Hai
Precision, an Apple supplier, which posted a
surprise 30 percent rise in net profit.
Chinese mainland stocks rose 1.5 percent, boosted by
government plans to build a new economic zone.
In Europe, Russian dollar-denominated stocks were
amongst the outperformers, up 1.2 percent to 1-1/2 month highs,
whilst Budapest shares gained 0.5 percent.
The zloty was flat against the euro ahead of
Poland's central bank meeting later in the day at which it is
expected to keep rates unchanged at a record low 1.5 percent.
Romanian policymakers are expected to hold interest rates at
"Central banks in the case of Poland and Hungary are still
in a good position to look through the acceleration in
inflation, attributing it to non-core factors," said Demir.
The Croatian kuna fell to an eight-week low ahead
of Croatian legislation on big corporate failures, designed to
prevent them from destabilising the wider economy and financial
For GRAPHIC on emerging market FX performance 2017, see tmsnrt.rs/2e7eoml
For GRAPHIC on MSCI emerging index performance 2017, see tmsnrt.rs/2dZbdP5
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see)
Emerging Markets Prices from Reuters
Equities Latest Net Chg % Chg % Chg
Emrg Mkt Indx 969.72 +4.55 +0.47 +12.46
Czech Rep 984.58 +3.55 +0.36 +6.83
Poland 2242.61 +3.31 +0.15 +15.13
Hungary 32148.93 +196.99 +0.62 +0.46
Romania 8197.51 +29.57 +0.36 +15.70
Greece 665.30 -1.14 -0.17 +3.37
Russia 1151.09 +15.11 +1.33 -0.11
South Africa 46010.98 +264.05 +0.58 +4.80
Turkey 88463.37 -149.17 -0.17 +13.21
China 3270.20 +47.68 +1.48 +5.37
India 29936.16 +25.94 +0.09 +12.43
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 27.07 27.04 -0.13 -0.24
Poland 4.25 4.25 +0.03 +3.74
Hungary 309.53 309.62 +0.03 -0.23
Romania 4.54 4.54 +0.09 -0.04
Serbia 123.68 123.86 +0.15 -0.27
Russia 55.93 56.08 +0.26 +9.54
Kazakhstan 311.79 312.91 +0.36 +7.01
Ukraine 27.12 27.12 +0.00 -0.44
South Africa 13.64 13.62 -0.17 +0.67
Kenya 103.20 103.10 -0.10 -0.80
Israel 3.65 3.65 -0.05 +5.42
Turkey 3.67 3.68 +0.11 -3.97
China 6.90 6.88 -0.17 +0.69
India 64.93 65.07 +0.22 +4.64
Brazil 3.10 3.09 -0.11 +5.08
Mexico 18.77 18.81 +0.23 +10.37
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 334 0 .01 7 69.00 1
(Additional reporting by Karin Strohecker; Editing by Janet