(Removes extraneous word in first paragraph) * Chipmakers lift benchmark KOSPI * 75 bps rate hike seen in Poland
(Removes extraneous word in first paragraph)
* Chipmakers lift benchmark KOSPI
* 75 bps rate hike seen in Poland
* HUF slides despite deposit rate hike
July 7 (Reuters) – Emerging market currencies enjoyed a
respite from their recent sell-off as the dollar retreated on
Thursday, while a rally in chipmakers and reports of economic
stimulus in China lifted several regional stock markets.
The Korean won, the South African rand and the
Mexican peso all gained, having fallen over the past few
days on worries of a global recession that sent investors
scurrying toward the safe-haven dollar.
The dollar weakened slightly on Thursday as investors
grappled with the possibility of a pause in interest rate hikes
amid signs of an economic downturn and easing commodity prices.
The MSCI index of EM currencies edged up
0.1% after hitting a 20-month low earlier this week.
The Polish zloty slipped toward March lows versus
the euro, trading down 0.1% at 4.8 ahead of a central bank
decision where policymakers are expected to hike interest rates
by 75 basis points to 6.75%.
“It’s a good trade off to go for 75 basis point hike to
address the situation around still elevated inflation but we’ve
also seen a very weak PMI print,” said Christian Wietoska, a
strategist at Deutsche Bank.
“If they go for 50, the market would not buy it. They would
continue to price in still more rate hikes. The only way they
can deliver a 100 is by giving a relatively dovish message on
the back of it.”
Governor Adam Glapinski said in June that the National Bank
of Poland (NBP) was nearing the end of its rate-hike cycle, but
with inflation at a 25-year high many economists think
significant further tightening will be needed.
Meanwhile, the Hungarian forint fell, unable to
benefit from a 200-basis-point hike of the central bank’s key
one-week deposit rate.
The forint, the worst performing central European currency
this year, touched a record low of 416.9 per euro on Wednesday
as soaring European gas prices and slowing business activity
fuelled concerns about a recession in the bloc.
“CEE currencies are under severe depreciation pressure. In
the last few trading days, fears of potential Russian gas
scarcity, against a background of high inflation and wide
current account deficits, have triggered a sharp selloff in
regional currencies,” JPMorgan economist Jose Cerveira said in a
note.
Elsewhere, Sri Lanka raised interest rates to 15.50%, the
highest level in two decades, to head off runaway inflation,
while Serbia raised its benchmark rate to 2.75% from 2.50 %.
.
MSCI EM equities index rose 1.0%, with wider
European stock markets boosted by reports of economic stimulus
in China.
Meanwhile, stocks in South Korea and Taiwan
gained 1.8% and 2.5%, respectively, as chipmakers rallied after
the world’s largest memory-chip and smartphone maker Samsung
Electronics posted its highest second quarter profit
in four years.
For GRAPHIC on emerging market FX performance in 2022, see http://tmsnrt.rs/2egbfVh
For GRAPHIC on MSCI emerging index performance in 2022, see https://tmsnrt.rs/2OusNdX
For TOP NEWS across emerging markets
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see
(Reporting by Sruthi Shankar and Devik Jain in Bengaluru, Marc
Jones in London; Editing by Vinay Dwivedi)
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