B.and Ambar Warrick
April 7 (Reuters) – The Russian ruble hit a five-month low on Wednesday as worries over strained relations with the West loomed, while many other emerging market currencies fell as the dollar appeared to have halted losses.
The ruble RUB = declined about 1.1%, causing losses across Europe, the Middle East and Africa (EMEA) as investors worried about possible Russian military build-up near eastern Ukraine that could trigger a reaction from the West.
This optimism about a possible rate hike by the Russian central bank resembled after unexpectedly high inflation data from March reinforced the case for tightening monetary policy.
“In our view, March inflation data and the risk balance suggest a 50 basis point increase. However, this result appears to be fully priced in due to fears of military escalation in Donbass,” Credit Suisse analysts wrote in a press release.
Other EMEA currencies also fell, with the Turkish lira TRY = Extension of losses after disappointing inflation data on Monday. The unexpected dismissal of the country’s central bank governor last month had pushed the lira to a record low.
South Africa’s rand ZAR = retreated from five-week highs, a recent decline in the dollar and bond yields had helped the currency.
The dollar was hovering around a two-week low but appeared to have stabilized after the big losses in recent sessions. Investors also waited for the minutes of the Federal Reserve’s latest meeting to assess the bank’s stance on monetary tightening. U.S. DOLLAR/
Optimism about a rapid economic recovery in the United States had driven dollar and government bond yields this year, and pressure on emerging market bonds and currencies as investors sought more reliable returns on US assets.
Even if emerging market economies will eventually recover, the International Monetary Fund predicts a mixed path to pre-pandemic levels, with many economies outside of Asia likely to lag behind their competitors.
G20 officials will also meet today to decide to add $ 650 billion to the IMF’s emergency reserves and step up efforts to assist developing countries battling the COVID-19 pandemic.
Emerging market stocks fell from more than a two-week high on Wednesday, with most Asian and EMEA exchanges trading lower.
In Central Europe, Hungary’s forint EURHUF = The euro gained slight gains and hovered around the one-month high as the central bank’s restrictive stance continued to support the currency.
For a GRAPHIC on emerging market FX performance in 2021 see http://tmsnrt.rs/2egbfVh
A GRAPH of the performance of the MSCI Emerging Index in 2021 can be found at https://tmsnrt.rs/2OusNdX
For TOP NEWS in emerging countries
The CENTRAL EUROPE market report can be found at CEE /
For the TURKISH market report see .IS
For RUSSIAN market report see RU / RUB
(Reporting by Ambar Warrick in Bengaluru; Editing by John Stonestreet)
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