Dollar gains hound EM currencies, Turkey's lira hits 12-week low

Dollar gains hound EM currencies, Turkey's lira hits 12-week low
By Karin Strohecker

LONDON, Oct 6 (Reuters) - Emerging stocks headed on Friday for their best week since August thanks to stellar gains in Asia, while currencies suffered at the hands of a buoyant dollar, with Turkey's lira touching a 12-week low.

MSCI's emerging equity benchmark gained 0.2 percent on the day and was up around 2 percent on the week. Hong Kong's bourse flirted with a 10-year high, boosted by a strong performance from Chinese automakers and financials.

The gains reflect the upbeat mood on world stock markets. The S&P 500 has posted six straight record high closes - the longest run since 1997 - on expectations U.S. President Donald Trump will succeed in implementing a tax overhaul .

Adding to this was data showing the world's biggest economy was performing solidly and the U.S. jobs reading later in the day is expected to confirm this.

The surge in optimism also lifted Treasury yields and took the dollar index to a seven-week high, which put the JPMorgan currency index, the ELMI Plus, on track for a fourth week of losses.

"Emerging market currencies are under broad-based selling pressure against the dollar, which is benefiting from growing market expectations that the Trump administration will finally make some progress on tax reforms, and some hawkish comments from Fed policymakers," said Rabobank's Piotr Matys.

Matys, who expected any U.S. interest rate increases to be gradual and tax reforms to be modest, said there was still a question mark on whether the dollar rally would last.

"We think it is a corrective rebound after the market adopted a way too bearish view."

Turkey's lira suffered the day's biggest losses, weakening 0.7 percent to hit its lowest in nearly three months against the dollar and breaking through a 200-day moving average.

South Africa's rand edged 0.1 percent lower.

Both currencies - seen as particularly vulnerable to U.S. interest rate rises due to their economies' large external financing needs - were on track for more than 1 percent falls over the week in their fourth straight week of losses.

Russia's rouble was on track for a second week of losses.

For GRAPHIC on emerging market FX performance 2017, see For GRAPHIC on MSCI emerging index performance 2017, see

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

on year

Morgan Stanley Emrg Mkt Indx 1104.11 +1.35 +0.12 +28.05

Czech Rep 1060.95 +3.56 +0.34 +15.12

Poland 2480.67 +17.22 +0.70 +27.35

Hungary 37983.00 +106.53 +0.28 +18.69

Romania 7951.54 +46.92 +0.59 +12.23

Greece 746.41 +1.61 +0.22 +15.97

Russia 1144.45 +0.40 +0.03 -0.68

South Africa 51094.81 +308.41 +0.61 +16.38

Turkey 03791.97 -542.35 -0.52 +32.83

China 3349.22 +9.57 +0.29 +7.91

India 31772.50 +180.47 +0.57 +19.33

Currencies Latest Prev Local Local

close currency currency

% change % change

in 2017

Czech Rep 25.83 25.81 -0.09 +4.56

Poland 4.30 4.30 -0.00 +2.33

Hungary 311.65 311.74 +0.03 -0.91

Romania 4.57 4.57 -0.04 -0.84

Serbia 119.00 118.99 -0.01 +3.66

Russia 57.77 57.72 -0.09 +6.05

Kazakhstan 343.55 345.57 +0.59 -2.88

Ukraine 26.75 26.78 +0.11 +0.93

South Africa 13.74 13.68 -0.38 -0.03

Kenya 103.15 103.10 -0.05 -0.76

Israel 3.52 3.52 +0.07 +9.40

Turkey 3.61 3.58 -0.70 -2.25

China 6.65 6.65 -0.00 +4.35

India 65.33 65.14 -0.29 +4.00

Brazil 3.15 3.15 +0.00 +3.15

Mexico 18.53 18.49 -0.25 +11.77

Debt Index Strip Spd Chg %Rtn Index

Sov'gn Debt EMBIG 301 -1 .04 8 05.09 1

All data taken from Reuters at 09:07 GMT. Currency percent change calculated from the daily U.S. close at 2130 GMT.

(Reporting by Karin Strohecker, additional reporting by Marc Jones, graphic by Sujata Rao; editing by John Stonestreet)

2017-10-06 11:18:08

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