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Emerging-market currencies fall as Mexico peso, Turkey lira sink

Emerging-market currencies declined as Mexico’s peso and Turkey’s lira slumped to record lows. Stocks rose to the highest level in three weeks as Chinese factories and services data bolstered confidence in the world’s second-largest economy.

Mexico’s peso weakened beyond 21 per dollar after Ford Motor Company decided to scrap plans to build a $1.6bn plant in the Latin American nation and US President-elect Donald Trump criticized General Motors Company for building a version of the Chevrolet Cruze compact there.

The Turkish lira dropped 1.4% after a report showing inflation accelerated more than estimated in December.

Currencies

The MSCI EM Currency Index fell 0.1%, the most since December 16 Mexico’s peso slumped 1.8%; Brazil’s real and Colombia’s peso led gains in emerging markets. The onshore yuan slid 0.2% after the PBOC weakened the fixing by the most in two weeks.

Stocks

The MSCI EM index of stocks added 0.8%, after closing little changed on Monday. The Ibovespa surged 3.7%, the biggest gain since November 7 Petrobras was among the main contributors to the Brazilian’s gauge advance Russia’s RTS Index rallied 3.2%.

Analysis

On Mexico: "It is going to be a choppy ride as the market and press get to understand the new administration’s policy agenda," said Andrew Stanners, an investment manager at Aberdeen Asset Management, which has $11bn in emerging-market debt.

On Turkey: "Market participants are looking for signs that the central bank is taking the inflation threat seriously," Henrik Gullberg, an emerging-market strategist at Nomura International in London, said by e-mail.

"Lira will continue to sell off on bad news like the terrible terror attack, whilst not appreciating back when sentiment is more supportive."

On China’s impact: "China’s figures are positive for commodities, especially metals," said Rafael Ohmachi, an analyst at brokerage Guide Investimentos in Sao Paulo. "Mining, steelmakers and oil producing companies are outperforming.'

Top stories

Ford Decision Cements Mexico as ‘Front Line’ for Trump’s policy agenda BlackRock sees shift to emerging-market bonds resuming in 2017.

Emerging market ETFs Gain $23.5 Billion in Year, Rebound in week China stocks rise after factory data.

Casinos fall in Hong Kong Turkish Lira plunges most worldwide to record low per Dollar Mexican economy facing tough 2017 even without Trump’s Wall.

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