Market News
Emerging Currencies Weaken for Second Day as Stocks Halt Selloff - BLOOMBERG
BY Selcuk Gokoluk
Tue, September 10, 2024 at 10:36 a.m. GMT+12 min read
(Bloomberg) -- Emerging-market currencies weakened for a second day as the US dollar held on to gains and US Treasury yields rose ahead of key data and rate decisions in the coming week.
The benchmark MSCI EM currency index’s two-day loss approached 0.5%, which would be the biggest since May, while the equity index was steady. Stocks are still down about 3.3% in September, which would make it the worst month since January for EM stocks.
The market is still digesting the US non-farm payrolls figures released on Friday and looking to price in the size of the interest rate cut for the next Fed meeting. Benchmark Treasury yields rose a second day, while the dollar held its gains ahead of the European Central Bank’s decision this week. The Israeli shekel, the Mexican peso and the South African rand led the losses in emerging-market currencies.
“EM FX is weakening again because of the USD strengthening,” said Guillaume Tresca, global EM strategist at Generali Asset Management in Paris. “The market pricing in terms of monetary easing is more than what we expect. It is not surprising to see some normalization, I mean depricing of easing a bit.”
CEE Inflation
In Europe, the forint weakened for a third day as softer-than-expected inflation data boosted rate-cut bets, adding to a series of indicators and policy announcements weighing on local assets. In contrast, Czech inflation came in faster than expected, complicating the central bank’s considerations on the pace of further monetary easing.
Meanwhile, China’s export data surprised on the upside but barely registered with investors amid pessimism for the world’s second biggest economy and the property sector’s losses. A benchmark index of the nation’s onshore shares is near the lowest levels since January 2019, yet another reflection of the depth of the market gloom.
Even as China’s exports unexpectedly accelerated in August, the benchmark CSI 300 fell as much as 0.7% before erasing losses to close 0.1% higher. Chinese 10-year government bond yield inched toward a new record low, while the offshore yuan was little changed after recent declines against the greenback.
