SINGAPORE, Jan 17 — Emerging-market stocks posted their first weekly drop in a month as Switzerland’s surprise move to abandon the franc’s cap damped demand for riskier assets. Currencies rebounded from a record low.

The MSCI Emerging Markets Index fell 0.3 per cent to 957.46, taking its loss this week to 0.4 per cent. Poland’s equities index slid 0.6 per cent in a third day of declines. The rouble pared a third weekly decline as climbing oil prices boosted demand for assets of the world’s largest energy exporter. The Ibovespa rallied on optimism Brazil’s new economic team will be able to boost growth.

Eastern European currencies strengthened after tumbling yesterday as Switzerland’s move to allow its currency to appreciate stoked concern individuals may struggle to repay loans denominated in Swiss francs.

“For the next week or two, there will be a lot of stories about these Swiss franc loans and a lot of people remembering the days of the financial crisis,” Anders Svendsen, an analyst at Nordea Bank AB in Copenhagen, said by phone. “This will put pressure on all the central European currencies.”

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The Swiss National Bank decision to scrap its minimum exchange rate will elevate the cost of paying off loans, including mortgages, in francs. Polish banks had 131 billion zloty (RM125b) of Swiss-franc mortgages on their books as of the end of November, amounting to 46 per cent of all home loans, according to data from the Polish financial-market supervisor.

Currencies gain

Six out of 10 industry groups in the emerging-market stock gauge fell today, led by consumer discretionary stocks. Financial shares retreated 0.5 per cent.

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Bank Zachodni WBK SA decreased 0.9 percent in Warsaw, taking the two-day retreat to 7.7 per cent. The WIG20 Index slipped 0.6 percent to the lowest level since September 2013.

Currencies in Hungary, Poland and the Czech Republic rallied more than 1.8 per cent versus the franc today after yesterday sliding more than 18 per cent each.

The rouble strengthened 0.1 per cent to 65.1985 per dollar. The Russian currency has slid seven per cent this month. Crude, the country’s top export, rebounded yesterday as the International Energy Agency lowered forecasts for supplies from outside OPEC and said prices could recover. Oil’s plunge into a bear market has pummeled the ruble and pushed Russia to the brink of a recession.

Brazilian stocks

The Ibovespa gained 2.1 per cent, erasing a weekly loss. Brazilian stocks rallied on increasing optimism that the country’s new economic team will rekindle growth. Since taking over as finance minister this month, Joaquim Levy said cutting gross debt below 50 percent of gross domestic product in the long term would be a positive step and signalled he could increase tax revenue to help achieve a balanced budget.

Hyundai Motor Co, which gets more than half of its revenue overseas, lost two per cent. South Korea’s Kospi Index sank 1.4 per cent.

Great Wall Motor Co fell five per cent in Hong Kong after Barclays Plc recommended investors sell the stock. The Hang Seng China Enterprises Index slipped 0.9 per cent as PetroChina dropped 1.6 per cent. The Shanghai Composite Index gained for a 10th week to cap the longest winning streak since 2007.

The premium investors demand to hold emerging-market debt over US Treasuries declined five basis points to 391 basis points, according to JPMorgan Chase & Co indexes. — Bloomberg