By Bansari Mayur Kamdar
Feb 9 (Reuters) – Currencies in emerging markets inched up on Thursday, with South Africa’s rand crawling higher ahead of a much-awaited speech by President Cyril Ramaphosa, while a recovery in China and Hong Kong shares buoyed the emerging markets shares index.
The rand ZAR= rose 0.4% to 17.69 in early trading as investors awaited Ramaphosa’s State of the Nation address, which could offer some solution to ease a worsening power crisis.
Currencies in central and eastern Europe edged higher against the euro, with the Romanian leu EURRON= rising 0.2% ahead of its rate decision due at 1300 GMT.
Romania’s central bank is expected to keep its benchmark rate unchanged at 7%, in line with others in central Europe after a year of sharp hikes.
Over the next 12 months, the leu is expected to fall 2.5% to 5.02, with the country’s budget and current account deficits continuing to pose a risk, a Reuters poll of market strategists showed.
Other regional currencies such as the Polish zloty EURPLN= and Hungarian forint EURHUF= looked set to gain over the next 12 months, helped by expectations of lower gas prices, access to European Union funds and a weaker dollar.
The Russian rouble RUBUTSTN=MCX slid against the greenback, briefly hitting its weakest level since late April, driven down by market demand for foreign currency and Russia’s lower export earnings.
The MSCI’s index for emerging market currencies .MIEM00000CUS gained 0.1% by 0842 GMT, while the stocks index .MSCIEF rose 0.6%, extending gains for their third straight session.
“We see emerging markets as well positioned to be early beneficiaries of the inflection point in global markets, earnings, and GDP growth we expect in 2023,” said Mark Haefele Chief Investment Officer, UBS Global Wealth Management.
Shares in China and Hong Kong closed higher after U.S. President Joe Biden said Washington’s relations with Beijing have since America shot down a suspected Chinese spy balloon, while investors remained hopeful of China’s economic recovery.
Elsewhere in emerging markets, Istanbul’s stock exchange operator suspended trading until Feb. 15 and cancelled all Wednesday’s trades in the wake of devastating earthquakes that struck Turkey and Syria
Egypt’s annual urban consumer price inflation jumped to a higher-than-expected 25.8% in January, its fastest in more than five years, from 21.3% in December, data showed.
(Reporting by Bansari Mayur Kamdar in Bengaluru;Editing by Elaine Hardcastle)
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