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EMERGING MARKETS-South African rand rises; EMFX near record high against weak dollar

05/10/2021 04:57
EMERGING MARKETS-South African rand rises; EMFX near record high against weak dollar

South Africa's rand hits 16-month high

Turkish unemployment rate eases in March

Dollar sinks to a more than two-month low

By Shashank Nayar

- Emerging market currencies hovered around record-high levels on Monday as weak U.S. jobs data kept the dollar under pressure, while South Africa's rand rose to a 16-month peak after Moody's skipped a sovereign rating review.

MSCI's index of emerging market currencies .MIEM00000CUS rose 0.3%, staying just below a record high hit on Friday, as rising commodity prices and weakness in the dollar benefited risk-driven assets.

A recent jump in commodity prices has benefited the currencies of major exporters, including the Russian rouble RUB=, Mexican peso MXN=, Chilean peso CLP= and Brazil's real BRL=.

The dollar sank to a more than two-month low versus major peers on Monday after a disappointing U.S. employment report prompted investors to temper expectations for higher interest rates, with focus now shifting to inflation data this week.USD/

"Anyone who thought that the Fed's employment target might be in touching distance in the foreseeable future has had a dampener on Friday. That means an important argument used by the USD bulls has been shaken," said Ulrich Leuchtmann, head of FX research at Commerzbank.

South Africa's rand ZAR= rose 0.4% and led gains across Europe, the Middle East and Africa. The currency's relatively higher yield has helped it benefit from a low U.S. interest rate regime, and made it the best performing emerging market currency so far this year.

Fears of a credit downgrade for South Africa receded after Moody's skipped a rating review for the country on Friday, helping the rand extend gains.


Turkey's lira dropped 0.3% as the country's unemployment rate inched lower in March to 13.1% from a year ago. Concerns over spiking inflation and weakening government finances have weighed on the lira this year.

Most central European currencies dropped against a stronger euro with Hungary's forint EURHUF=, Polish zloty EURPLN= and the Czech crown EURCZK= down between 0.1% and 0.2%.

Poland's central bank will start thinking about changing monetary policy in the middle of 2022, governor Adam Glapinski said on Friday, adding that the Monetary Policy Council was not discussing cutting rates.nL1N2MU1EU

Polish banks were also awaiting a hearing on Tuesday, which will decide how courts treat thousands of borrowers who took out Swiss franc loans more than a decade ago, only to face ballooning repayments when the zloty weakened. nL8N2MU31H

The MSCI's index of EM stocks .MSCIEF rose 0.3% to a 10-day high, with most EMEA and Asia bourses gaining on the prospect of accommodative monetary policy across the globe.


For GRAPHIC on emerging market FX performance in 2021, see http://tmsnrt.rs/2egbfVh


For GRAPHIC on MSCI emerging index performance in 2021, see https://tmsnrt.rs/2OusNdX


For TOP NEWS across emerging markets nTOPEMRG

For CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB



EM currencies YTD and MTDhttps://tmsnrt.rs/3tu97KW

(Reporting by Shashank Nayar in Bengaluru; Editing by Subhranshu Sahu)

(([email protected]; within U.S. +1 646 223 8780; outside U.S. +91 80 6182 2256;))