By Karin Strohecker
LONDON, Nov 25 Emerging markets looked to end
the week on a cautiously positive note on Friday with stocks
poised to snap a four-week losing streak while a number of
currencies pulled away from record lows thanks to the dollar
taking a break from its relentless rally.
Emerging assets have suffered since Republican Donald
Trump's unexpected election victory led to a major repricing of
assets, with investors pushing the dollar to a 13-1/2 year high
and sending U.S. Treasury yields soaring in anticipation that
increased infrastructure spending would push up inflation.
India's rupee, which had hit a record low on
Thursday, strengthened 0.5 percent against the dollar
after the Indian central bank intervened heavily in morning
trade when the currency looked set to weaken again.
Turkey's lira strengthened 0.2 percent on the day,
but only after hitting yet another record low in early trading.
Turkey had raised interest rates for the first time in
nearly three years on Thursday, hiking its benchmark rate by a
more-than-expected 50 basis points as concerns about the
tumbling currency outweighed President Tayyip Erdogan's calls
for cheap credit.
However, both currencies were on track for weekly losses,
the lira for the fifth week in succession.
"The rise in U.S. yields as a result of (Trump's)
expansionary fiscal agenda will be long-lasting and present a
headwind for emerging market assets," Andreas Johnson, economist
at SEB wrote in a note to clients.
"In response, emerging market central banks will soon follow
the U.S. Fed and hike rates - (Mexico's) Banxico and the central
bank of Turkey already have - causing yield spreads to narrow
and the rout to stall."
In South Africa, the rand weakened 0.2 percent with
investors showing nerves ahead of ratings agencies' latest
assessments, which could see the country downgraded to junk next
week and push up its borrowing costs.
Moody's will review its Baa2 rating, which is two notches
above sub-investment grade, later on Friday. S&P and Fitch,
which rate South Africa just one rung from junk, are expected to
give their verdicts next week, on Friday.
"I am hesitant to say that a downgrade would trigger a major
immediate sell-off - but I think it is not going to help
sentiment in the medium term, it won't help foreign direct
investment flows," said Nazmeera Moola, co-head of fixed income
at Investec Asset Management.
Meanwhile, emerging stocks looked on track to snap a
four-week losing streak. MSCI's emerging markets benchmark
gained 0.4 percent on the day, lifted by solid gains
in Asia, and was up 1.3 percent on the week.
Emerging Markets Prices from Reuters
Equities Latest Net Chg % Chg % Chg
Emrg Mkt Indx 855.56 +3.54 +0.42 +7.73
Czech Rep 884.16 -2.15 -0.24 -7.55
Poland 1798.54 -8.73 -0.48 -3.26
Hungary 30095.44 -63.14 -0.21 +25.81
Romania 6834.93 -1.22 -0.02 -2.42
Greece 621.54 -2.09 -0.34 -1.55
Russia 1023.09 -5.77 -0.56 +35.14
South Africa 43960.79 -121.41 -0.28 -4.01
Turkey 74220.94 +27.87 +0.04 +3.48
China 3261.49 +19.76 +0.61 -7.85
India 26316.34 +456.17 +1.76 +0.76
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 27.03 27.01 -0.09 -0.12
Poland 4.41 4.42 +0.15 -3.51
Hungary 309.61 310.20 +0.19 +1.62
Romania 4.51 4.51 -0.06 +0.19
Serbia 123.08 123.39 +0.25 -1.31
Russia 64.51 64.44 -0.11 +13.08
Kazakhstan 338.80 335.97 -0.84 +0.50
Ukraine 25.67 25.55 -0.47 -6.69
South Africa 14.17 14.15 -0.16 +9.11
Kenya 101.80 101.80 +0.00 +0.39
Israel 3.87 3.87 -0.13 +0.37
Turkey 3.44 3.44 +0.10 -15.21
China 6.92 6.92 -0.01 -6.14
India 68.42 68.75 +0.49 -3.24
Brazil 3.39 3.39 -0.06 +16.71
Mexico 20.68 20.73 +0.23 -16.98
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 382 -2 .00 7 28.13 1
All data taken from Reuters at 10:25 GMT.
Currency percent change calculated from the daily U.S.
close at 2130 GMT.
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 )
(Reporting by Karin Strohecker)