Rand, ruble take emerging market currencies higher

London - Emerging markets advanced, with stocks climbing to the highest level in more than a year, as oil rose and traders speculated the U.S. will keep rates lower for longer. South Africa’s rand and Russia’s ruble led currencies higher.

The MSCI Emerging Markets Index gained for an eighth day after capping a fifth weekly increase. Speculation of more property takeovers lifted shares in Shanghai to the biggest advance since May. The ruble climbed as oil advanced for a third day, while the Thai baht strengthened after data showed the nation’s economy grew more than expected. The extra yield investors demand to own developing-nation debt instead of Treasuries headed for the lowest close since June 2015.

Developing-nation stocks are extending the longest streak of weekly gains since 2014 as crude’s recovery and optimism that the world’s major central banks will take steps to support growth buoy demand for higher-yielding assets. Traders scaled back bets for the Federal Reserve to raise interest rates this year after reports last week showed US retail sales were little changed in July and wholesale prices unexpectedly fell, while data on Monday showed Japan’s economy grew less than forecast in the second quarter.

“Interest rates will stay low and the dollar should be quite stable,” said Hertta Alava, the head of emerging markets at FIM Asset Management Ltd. in Helsinki, who favors Chinese and Russian equities. “That is supportive for emerging-market currencies. The oil price recovery is supportive for sentiment too.”

Stocks

The MSCI Emerging Markets Index climbed 0.7% to 916.85 as of 11:36 in New York, bringing this year’s gain to 15%. Traders see a 45% chance that the Fed will raise interest rates in December, down from 49% on Thursday, futures data show.

While stocks climb, a technical indicator is signaling the rally may be overdone. The MSCI gauge’s relative strength index was at 77 on Monday, the highest this year and the sixth day above the 70 level that some technical analysts say indicates the securities are set to reverse direction.

The Shanghai Composite Index jumped 2.4% as a measure of real estate companies capped its steepest two-day rally in almost a year after stake purchases by China Evergrande Group fueled optimism of more mergers. Shares in Shenzhen rallied after a report said details of a delayed exchange link with Hong Kong will be announced shortly. Hong Kong’s Hang Seng China Enterprises Index increased 1.6% to the highest level this year.

Russia’s Micex Index added 0.7%, set to close at a record high. The Bloomberg GCC 200 Index of stocks in the six countries of the Gulf Cooperation Council advanced 0.4% to a three-week high. Korean and Indian markets were shut for holidays.

The Jakarta Composite Index slid 1.1%, its fifth day of losses. Data on Monday showed Indonesia’s exports in July trailed estimates.

Currencies

The MSCI Emerging Markets Currency Index added 0.4%, reversing an earlier decline.

The rand climbed 1.5% and the ruble strengthened 1.2%, followed by gains of at least 0.9% in Brazil’s real and the Mexican peso.

The baht appreciated 0.6%. Thailand’s gross domestic product expanded 3.5% in the three months through June from a year earlier as the military government accelerated spending on road and rail projects to help offset weak demand for the nation’s exports.

China’s yuan declined 0.1% as weaker-than-expected economic data last week reignited concern over growth in the world’s second-largest economy.

Bonds

The extra yield investors demand to own emerging market debt in dollars rather than Treasuries narrowed three basis points to 339, according to JPMorgan Chase & Co. indexes.

Malaysian bonds gained, sending the yield on notes due in 2026 fell for a fifth day, dropping five basis points to 3.49%. Economic growth slowed for a fifth quarter in the period ended June, data showed on Friday.

In emerging Europe, the rate on Hungary’s 10-year bond rose three basis points to 2.81% while Russia’s five-year yield fell one basis point to 8.72%.