Emerging-market currencies slip, including the rand

Bengaluru — Emerging-market currencies slipped on Friday as investors assessed implications of the US Federal Reserve’s neutral message, while stocks were headed for their second weekly drop in a row amid thin holiday trade in Asia.

MSCI’s index for emerging-market currencies slipped for a second straight session as the dollar stayed broadly firm with the focus on the Turkish lira which edged closer to near seven-month lows.

Turkey’s inflation came in slightly lower than expected for March although annual inflation eased from a 15-year peak of above 25% in October.

“The data shows impact of very depressed domestic demand conditions,” said Timothy Ash at Blue Bay Asset Management. “Some will also focus on the continued maintenance of price controls and question how accurate or realistic these inflation numbers are now.”

Later in the day all eyes will be on a Fitch rating for the recession-hit country, with markets pricing in a downgrade.

The rand was on track to end lower for a third straight week with investors looking forward to a national election next Wednesday. A clean sweep for President Cyril Ramaphosa’s ANC looks certain, but the size of his majority will be pivotal in dictating the future of his presidency.

Falling oil prices have benefited crude importer India’s rupee while export major Russia’s rouble tread water.

Stock indices across emerging markets were more mixed with light trading in Asia as mainland Chinese markets remained shut for a holiday. Hong Kong stocks edged higher, but South Korea’s Kospi index shed more than 0.5%.

In emerging Europe, there is some expectation for an upgrade from Moody’s for Hungary’s credit rating, but the forint barely moved against the euro with the country being within investment grade.

Investors also await US employment figures due later in the day, which is forecast to show 185,000 net new jobs were added in April and the unemployment rate steady at 3.8%.

A solid reading would bolster the notion that world’s biggest economy is on track for its longest expansion ever, benefiting the dollar.

Reuters