By Sujata Rao
LONDON, Oct 5 (Reuters) - Emerging currencies broadly
weakened on Thursday, with South Africa's rand down 0.3 percent
against a marginally firmer dollar, after a stark warning from
the central bank over the government's failure to tackle
JPMorgan's currency index, the ELMI Plus, touched a one-week
high on Wednesday but was well off the three-year highs it hit
in September as clear signs of U.S. economic recovery are seen
triggering a Fed interest rate rise in December.
MSCI's main emerging equity index was flat after
four days of gains, trading just off 10-day highs.
On currency markets, the rand slipped back towards recent
five-month lows while the rouble shed 0.2 percent.
Other emerging currencies seesawed just below flat as investors
awaited U.S. jobs data due on Friday.
"I don't think this is the big turn in emerging markets
though we may have hit a patch when EM currencies are likely to
weaken for a while. They have ridden on the coat tails of the
dollar, now the dollar looks like it will appreciate and EM is
reacting to that," UBS strategist Bhanu Baweja said.
While expecting emerging markets to withstand the pressures,
he highlighted "weak links" as countries reliant on overseas
dollar financing and revenues from a slowing China.
South Africa fitted that bill, Baweja said, noting that
while the country did not have much dollar debt, it received
overseas dollar inflows into its financial markets and its terms
of trade were determined by commodity prices.
"Then there are the idiosyncratic factors such as domestic
politics and credit risks. Also the bulk of current account
improvement and terms of trade gains are behind us," he added.
Central bank governor Lesetja Kganyago said on Wednesday
that the lack of action against graft signalled South Africa was
not serious about tackling corruption and the policy uncertainty
was hampering growth.
The Czech crown approached a November 2013 high against the
euro ahead of inflation data next week that could set
the stage for an interest rate rise in November. Czech bond
yields surged to the highest since Sept 2014.
"Fundamentals remain extremely supportive of further crown
appreciation. The Czech Republic is the only (central European)
country where tight labour market conditions have translated
into core inflation running above target," UniCredit analysts
said, predicting a rate rise in November, followed by three more
Earlier, Indian yields jumped to the highest since June
after the central bank left interest rates on hold and raised
For GRAPHIC on emerging market FX performance 2017, see http://tmsnrt.rs/2e7eoml
For GRAPHIC on MSCI emerging index performance 2017, see http://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 1102.98 +1.14 +0.10 +27.92
Czech Rep 1054.67 +2.16 +0.21 +14.44
Poland 2449.53 +5.34 +0.22 +25.75
Hungary 37772.44 -150.80 -0.40 +18.03
Romania 7899.31 +10.65 +0.14 +11.49
Greece 751.56 +0.84 +0.11 +16.77
Russia 1136.23 -0.91 -0.08 -1.40
South Africa 50560.06 +17.65 +0.03 +15.17
Turkey 04621.84 +73.98 +0.07 +33.89
China 3349.22 +9.57 +0.29 +7.91
India 31697.56 +25.85 +0.08 +19.05
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 25.84 25.84 +0.02 +4.54
Poland 4.30 4.30 -0.09 +2.43
Hungary 311.42 311.77 +0.11 -0.83
Romania 4.57 4.58 +0.12 -0.78
Serbia 119.00 119.02 +0.02 +3.66
Russia 57.49 57.66 +0.29 +6.57
Kazakhstan 344.90 344.17 -0.21 -3.26
Ukraine 26.78 26.79 +0.04 +0.82
South Africa 13.60 13.56 -0.31 +0.96
Kenya 103.10 103.20 +0.10 -0.71
Israel 3.51 3.51 +0.15 +9.82
Turkey 3.57 3.57 +0.00 -1.25
China 6.65 6.65 -0.00 +4.35
India 65.04 65.03 -0.02 +4.47
Brazil 3.13 3.13 +0.01 +3.78
Mexico 18.25 18.26 +0.03 +13.49
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 304 0 .06 8 05.57 1
All data taken from Reuters at 08:37 GMT. Currency percent
change calculated from the daily U.S. close at 2130 GMT.
(Reporting by Sujata Rao; Graphic by Karin Strohecker; editing
by John Stonestreet)
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