HANOI (Reuters): Most emerging market currencies were steady on Friday while equities advanced, as optimism over some economic improvement in the US and positive corporate earnings outweighed investor concerns over tariffs.
MSCI’s global emerging markets stock index was up 0.7% on the day and looked set to close the week with gains.
Heavyweight Asian stocks gained, with those in Taiwan up over 1% to a more than four-month high. TSMC , the world’s largest contract chipmaker, gained more than 2% after posting a record quarterly profit on Thursday.
US markets surged to new all-time highs overnight after key economic indicators, including retail sales and jobless claims, exceeded expectations, setting a positive tone for EM stocks.
Regional bourses advanced, with those in Hungary and Romania up 0.4% each. Polish stocks jumped 2.4%, on track for their biggest weekly rise since late April.
On the trade front, Thailand said it had made more proposals to the U.S. during talks, raising hopes among investors that deals can be reached before U.S. President Donald Trump’s new August 1 deadline for imposing tariffs.
Markets were briefly rattled this week by a report that Trump was going to fire Federal Reserve Chair Jerome Powell soon, with the dollar index taking a hit, although it recovered losses after Trump denied the claims.
After gains on Thursday, the dollar index was down 0.2% on Friday, lifting most EM currencies.
“The dollar had got to a point where it was much more expensive than usual and that trend changed this year,” said Paul Jackson, global head of asset allocation research at Invesco EMEA.
“It probably will remain weak for at least the next year and probably beyond that, partly because it’s expensive and partly because of the policies being put in place by the U.S. administration.”
South Africa’s rand climbed 0.9%, while its stocks jumped 1.1%. The country was set to wrap up the two-day meeting of finance chiefs from the Group of 20.
Russia’s rouble was 0.4% higher against the dollar, over-the-counter market data showed. The European Union reached an agreement on an 18th sanctions package against the country in another blow to its oil and energy industry.
Turkey’s lira was 0.3% lower, while its stocks fell 0.2%.
Emerging European currencies were largely flat against a higher euro.
MSCI’s emerging markets currency gauge was little changed on the day, but was on track for its second consecutive weekly decline – its first back-to-back weekly loss since early April.
Meanwhile, Moody’s is set to review its ratings on the Czech Republic, while Romania awaits minutes from its central bank’s latest meeting. – Reuters
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