* China ramps up liquidity support to banking system
* Indian CB likely selling dollars to keep rupee off record
low
* Polish zloty, stocks jump after election flags political
shift
* Budget hit from Israel-Hamas war likely manageable –
Israel CB
* EM stocks drop 0.7%, FX eases 0.1%
Oct 16 (Reuters) – Most emerging market stocks and
currencies fell on Monday with investors jittery as tensions
escalated in the Middle East, but Poland’s zloty jumped after a
weekend election with the opposition looking set to oust the
ruling nationalists.
MSCI’s gauge for emerging market equities slid
0.7% to a near one-week low on concerns that the war between
Israel and Hamas could spread to other areas in the region and
pose a threat to oil supplies.
The currencies index had eased 0.1% by 0904
GMT.
Oil importer Turkey’s lira was at 27.8 to the
dollar as crude prices eased from Friday’s nearly 6% surge but
remained above $90 a barrel.
Traders in India, also an oil importer, said the Reserve
Bank of India is likely selling dollars to ensure the rupee
does not fall to a record low against the dollar.
“Typically, such periods of risk-off are quite short-lived,”
Commerzbank analysts wrote in a note, but they added that it is
still “far too early to abandon risk-off” while it is unclear
how Arab states will react to the conflict.
The Israeli shekel slipped 0.2% to its lowest levels
in more than seven years even as central bank Governor Amir
Yaron said on Sunday that the impact of the clash with Hamas on
the country’s budget will be manageable.
Investors are also still concerned about U.S. monetary
policy remaining tighter for longer as oil prices stay high,
fuelling fears of a resurgence in inflation pressures.
In central and eastern Europe, Poland’s zloty
spiked 1.3% and hit a nearly two-month high against the euro as
the ruling Law and Justice party appeared to have lost their
parliamentary majority, opening the way for the opposition to
take power.
The local stock market’s benchmark WIG index also
surged 2.7%, led by banks.
“I do expect that the better outlook for local and foreign
investment and unlocking European Union funds could give the
economy great potential and be positive for the currency in
2024,” said Rafal Benecki, chief economist at ING Bank.
Elsewhere, China’s central bank ramped up liquidity support
as it rolled over medium-term policy loans in a latest effort to
buttress investor confidence.
However, the country’s blue chips index and Hong
Kong stocks both closed down 1.0%, tracking the broader
weakness in global markets.
For GRAPHIC on emerging market FX performance in 2023, see http://tmsnrt.rs/2egbfVh
For GRAPHIC on MSCI emerging index performance in 2023, 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 Johann M Cherian in Bengaluru; Editing by Kirsten
Donovan)
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