LONDON Nov 23 Accelerated foreign capital
flight pushed offshore Chinese yuan to record lows on Wednesday
while the Indian rupee and Turkish lira neared similar
milestones, though emerging stocks continued to enjoy a boost
from rising global equities.
Mainland yuan has fallen to 8-1/2-year lows after Donald
Trump's shock win in the Nov. 8 U.S. elections but Hong
Kong-traded offshore yuan, used frequently by foreigners, also
fell to levels unseen since offshore trade started in 2010
Traders said options were pricing more upside to the dollar
versus offshore yuan on expectations of increased capital
outflows from China. The onshore yuan too is seen weaker as
one-year non-deliverable forwards price it at
7.096, about 3 percent below the midpoint set by the central
"It's really more of a dollar strength story - if you
compare the dollar to the euro or the yen, then the weakness
isn't restricted to emerging markets currencies," said Simon
Quijano-Evans, a strategist at L&G Investment Management.
"The central bank is showing it doesn't really want to waste
its FX reserves on something that it cannot influence at the
In India, growing strains from the government's
de-monetisation moves pushed the rupee to within a whisker of
eight-month lows against the dollar, sparking reports of central
Expectations of a hit to short-term economic growth have
taken stocks to six-month lows while the weak rupee has
fanned inflation fears. Combined with the Trump impact, this has
induced foreigners to yank $3.2 billion from Indian stocks and
bonds since Nov. 8, data from the local regulator shows.
Five year credit default swaps for the State Bank of India
, used as a proxy for the sovereign, were at 162
basis points, according to Markit, the highest since mid-August.
Quijano-Evans called it "the mother of all monetary shocks".
"The economy is going to have to deal with this monetary
shock in the fourth quarter before it hopefully starts to
recover next year," he said.
"That needs a reaction from the central bank through some
sort of monetary easing."
Elsewhere, as the dollar index eased for a third day
and a worldwide equity and commodity rally continued, MSCI's
emerging equity index rose 0.25 percent, moving further off
Asian currencies broadly followed the yuan, with Malaysia's
ringgit at 14-month lows. Declining oil prices took the
Russian rouble almost 1 percent lower though
rouble-denominated equities approached record highs, lifted by
mining and steel stocks.
Emerging European markets are focusing on Turkey to see if
President Tayyip Erdogan will soften his stance on raising
interest rates, given the lira's 8 percent decline since the
The currency slipped 0.4 percent on Wednesday, staying near
Erdogan is expected to chair an economic coordination
committee on the eve of a central bank meeting that may deliver
the first rate rise in almost three years.
But ING analysts said one rate hike would do nothing to
salvage the lira or local bonds. They predicted a bounce to be
short-lived as "any persistent tightening cycle and higher
policy rates look only a distant possibility at this point".
They noted the currency and bonds remain among the worst
performing in emerging markets - while even the Mexican peso
has recouped 4 percent of post-election losses, the lira
has hardly budged from record lows.
The South African rand eased 0.4 percent and bond
yields rose off 12-day lows as data showed October inflation
quickening to 6.4 percent year-on-year, above analysts'
forecasts. The central bank is expected to hold
interest rates at 7 percent on Thursday.
For GRAPHIC on emerging market FX performance 2016, see tmsnrt.rs/2e7eoml
For GRAPHIC on MSCI emerging index performance 2016, 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 859.47 +2.02 +0.24 +8.23
Czech Rep 893.01 +0.72 +0.08 -6.62
Poland 1779.38 +3.72 +0.21 -4.29
Hungary 30252.86 +12.48 +0.04 +26.47
Romania 6850.24 -1.95 -0.03 -2.20
Greece 627.03 -4.18 -0.66 -0.68
Russia 1021.33 +4.49 +0.44 +34.91
South Africa 44749.59 +174.53 +0.39 -2.29
Turkey 75582.04 -229.95 -0.30 +5.37
China 3241.47 -6.88 -0.21 -8.41
India 26065.19 +104.41 +0.40 -0.20
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 27.01 27.01 -0.02 -0.05
Poland 4.41 4.41 +0.10 -3.44
Hungary 309.03 308.40 -0.20 +1.82
Romania 4.51 4.51 -0.02 +0.13
Serbia 123.30 123.43 +0.11 -1.48
Russia 64.19 63.67 -0.80 +13.65
Kazakhstan 335.60 335.21 -0.12 +1.46
Ukraine 25.58 25.63 +0.20 -6.36
South Africa 14.06 14.06 -0.00 +9.96
Kenya 101.75 101.80 +0.05 +0.44
Israel 3.86 3.86 -0.13 +0.63
Turkey 3.39 3.38 -0.23 -13.99
China 6.90 6.89 -0.12 -5.86
India 68.49 68.39 -0.15 -3.34
Brazil 3.36 3.35 -0.04 +18.00
Mexico 20.58 20.58 +0.01 -16.57
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 385 2 .03 7 30.31 1
All data taken from Reuters at 09:47 GMT.
Currency percent change calculated from the daily U.S.
close at 2130 GMT.
(Additional reporting by Claire Milhench; Editing by Mark