Emerging market currencies fell with the dollar climbing to its highest in nearly two weeks
Emerging market currencies fell on Wednesday with the dollar climbing to its highest in nearly two weeks as investors largely ignored U.S. President Donald Trump’s State of the Union address.
Stocks were mostly flat. Concern over global growth continued to weigh on sentiment and most of Asia remained closed for Lunar New Year holidays.
“The address did not offer anything of real interest to financial markets,” Paul Donovan, chief economist at UBS Global Wealth Management, said in a note.
“There was no escalation of tensions – at least not meaningfully, which might be considered a win for investors, who prefer it when things do not escalate,” he said.
MSCI’s index for emerging-market currencies fell, led lower by South Africa’s rand and Turkey’s lira .
German industrial numbers showed a slump in December, adding to a slew of weak economic data this week.
“We could see EM currencies come under some pressure with global slowdown still weighing on sentiment,” said Jason Tuvey, senior EM economist at Capital Economics.
India’s rupee was subdued as investors awaited the outcome of a three-day central bank policy meeting that ends on Thursday, where officials are expected to leave rates unchanged. Stocks in Mumbai hovered around five-month highs, led by gains in IT stocks.
Russia’s rouble was higher, while stocks in Moscow slid from record highs, led by declines in financials.
Indonesia’s rupiah outperformed other emerging-market currencies, climbing to an eight-month high, after robust growth data.
In emerging Europe, the Hungarian forint slipped for a fifth consecutive session against the euro as investors priced out expectations the central bank would soon tighten market liquidity.
The Polish zloty barely moved before a central bank meeting where officials are expected to leave rates unchanged. Investors were tracking a controversy over the salary of one of Governor Adam Glapinski’s aides, which could force him to quit.