EMERGING MARKETS: Stocks at 9-month highs as Nigeria, Hungary and Egypt Central Banks meet
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MSCI’s benchmark pan-EM index was just about holding 0.2 percent gains as a mild wave of caution drifted in ahead of key Federal Reserve and Bank of Japan meetings in the coming days and as commodity prices dropped lower.Nigeria’s naira was slumped at 310 per dollar as analysts predicted the central bank would be forced to hike interest rates despite the renewed weakening of oil which brings in the bulk of its revenues.The latest poll by Reuters shows economists expect Lagos to lift its rates to 13 percent from their current 12 percent.“With inflation at 16.5 percent if they want to really deliver a positive credibility shock they need to do 500 basis points, though I doubt they will,” said UBP Asset management’s EM Macro and FX strategist Koon Chow.Hungary, which has been emerging Europe’s top performing market again this year, was also holding a rate meeting as was more turbulent Egypt, where speculation continues about a devaluation of the dollar-pegged Egyptian pound.The pound has weakened to unprecedented 13 to the dollar on the black market this week on expectations of an FX shift as an acute dollar shortage hamper trade in the import-dependent country.Hungary’s forint, in contrast, remains relatively strong and has been on a near-constant rise against the euro over the last month after being whacked prior to that by Britain’s vote to leave the European Union.The National Bank of Hungary is expected to keep its main interest rates on hold at its meetings on Tuesday, having taken another unconventional easing measure recently by reducing local banks’ options to hoard their funds.“I think they will keep their powder dry for now,” said UniCredit EM strategist Kiran Kowshik. “Rates are already at record lows, although they will probably still send a dovish signal.”Turkish markets looked to have finally calmed after some dramatic falls over the last week in the wake of a failed coup attempt and a subsequent clamp down on rights by the government.Stocks in Istanbul and the lira were both barely budged, the former having bounced 3 percent on Monday.Discover more from NewsBreakers
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