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EMERGING MARKETS-Currencies gain on weak dollar; Stocks set to break winning streak

reuters.com · 09/02/2021 04:29
EMERGING MARKETS-Currencies gain on weak dollar; Stocks set to break winning streak

Turkey may see rate cut this month - Investors

Rand up for 9th straight session - longest since 2010

Moody's downgrades Peru, bonds in focus

By Susan Mathew

- Emerging stocks looked set to end a four-day winning run on Thursday, as worries over economic growth weighed, while most currencies firmed against a dollar hovering at multi-week lows following disappointing jobs data.

Turkey's lira TRY= was up 0.3%. Several investors who participated in a central bank conference call on Wednesday said it hinted at a possible interest rate cut, and noted it did not repeat previous promises to keep the rate above inflation. nL8N2Q32ZC

President Tayyip Erdogan has called for a cut, even tough the inflation rate matches the country's benchmark interest rate of 19%. August inflation data is due on Friday, and the next rate meeting is on Sept. 23.

The lira had hit a nearly four-month high, before paring some gains. It is down 10% this year, but gained on Wednesday when a strong GDP number boosted sentiment. JPMorgan, Goldman Sachs and Credit Suisse raised their Turkish economic growth forecasts for 2021 post the report, but Citi saw problems ahead.

"Productivity slowdown, a more leveraged economy, a narrower policy space and uncertainty associated with the pandemic cloud the growth outlook," strategists at Citi Research said, adding they expected a significant fall in economic activity that is likely to become more visible in 2022.

EM stocks .MSCIEF hit a six-week high before trading flat as gains in many Asian bourses, including the Shanghai Composite .SSEC and Hong Kong stocks .HSI offset losses elsewhere.

South African stocks .JTOPI lost 0.4%, while the rand ZAR= hit a one-month high, extending gains to the ninth straight session - its longest such run since December 2010. It is set to gain around 6.8% over the latest winning streak.

"The (rand) is heading into overbought territory, but we are unlikely to have a significant correction before Friday's U.S. payrolls and unemployment numbers," said Andre Cilliers, currency strategist at TreasuryONE. .J

Peruvian bonds were in focus after ratings agency Moody's downgraded Peru's rating by one notch to 'Baa1' late on Wednesday, citing a "continuously polarised and fractured political environment" affecting policymaking capacity. The ratings agency changed the outlook to stable from negative. nL1N2Q402L

Poland's zloty EURPLN= edged higher, staying near two-month highs ahead of a Supreme Court meeting on Thursday that could issue guidance on the treatment of cases involving foreign currency loans. But analysts say disagreements over whether some of its judges were illegally appointed mean a final decision is unlikely. nL8N2Q33X5

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

South African rand set to gain for nine straight sessionshttps://tmsnrt.rs/3zHDZeU

(Reporting by Susan Mathew in Bengaluru and Emma Rumney in Johannesburg; editing by Barbara Lewis)

((susan.mathew@thomsonreuters.com; +91-80-6287-2704;))