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Emerging currencies in longest slide in a year

May 10 2016 11:22
Anuchit Nguyen and Lilian Karunungan

Bangkok - Emerging-market currencies fell for a seventh day, the longest losing streak since March 2015, as the dollar rallied on the prospect of higher US interest rates.

Malaysia’s ringgit slumped to a seven-week low to lead declines and Russia’s ruble weakened after Brent crude tumbled 3.% on Monday.

South Korea’s won touched its lowest level in seven weeks as data from China and the US added to evidence global economic growth remains subdued.
A gauge of emerging stocks rose for the first time in eight days as as oil stabilised and base metals clawed back some of Monday’s losses.

Developing-nation assets have retreated in May after rallying in the last four months as data pointed to sluggish growth in the world’s biggest economies.

The Bloomberg Commodity Index has dropped on five of the previous six trading days, and Brent crude closed at a three-week low on Monday.

The Bloomberg Dollar Spot Index was little changed, after a five-day winning streak that was triggered by remarks from several Federal Reserve officials that US borrowing costs may rise as soon as June.

“As the dollar returns to a stronger trend it will certainly affect investor sentiment on emerging markets on concern about fund outflows,” said Thanomsak Saharatchai, head of research at KT Zmico Securities in Bangkok.

“Further declines in oil prices will also have impact on some developing countries that rely on exports of commodities.”
Philippine Election

The MSCI Emerging Markets Currency Index fell 0.% as of 10:11, and has lost 2% in the past seven days. The ringgit lost 1%, headed for its weakest close since March 21, and the won dropped 0.6%.

Taiwan’s dollar slid 0.4% and the ruble declined 0.7%.

The Philippine peso jumped 0.7%, the most since March 30, after an anti-establishment candidate claimed victory in Monday’s presidential election.

The nation’s benchmark stock index gained 2.6%, the biggest gain since January, after Rodrigo Duterte, the mayor of Davao City, sought to calm markets with a call for “healing” as he seeks to win over Filipinos and investors watching closely how he will manage the economy.

Stocks rise

The MSCI Emerging Markets Index rose 0.1%, after losing 5.1% in the previous seven days. Six of the 10 industry groups in the measure advanced.

The gauge has gained 0.9% this year and is valued at 11.3 times the 12-month estimated earnings of its constituents. That compares with a multiple of 15.7 for the MSCI World Index, which has fallen 0.7% in 2016.

The FTSE/JSE Africa All Share Index gained 0.4%, South Korea’s Kospi advanced 0.8%, while Turkey’s Borsa Istanbul 100 Index rose 0.1%.

Chinese stocks in Hong Kong headed for their first gain in seven days as financial companies advanced. The Hang Seng China Enterprises Index climbed 0.4%, erasing earlier losses.

China Minsheng Banking rose the most in three weeks.

 The  Shanghai Composite Index closed little changed after data showed China’s consumer prices rose for a third month, while factory-gate deflation narrowed more than expected.

markets  |  currencies
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