Emerging-market currencies hit by strong dollar; stocks fall

MSCI's emerging-market currencies index slipped 0.1 per cent. — Reuters pic
MSCI's emerging-market currencies index slipped 0.1 per cent. — Reuters pic

NEW YORK, April 24 — Emerging-market currencies fell today against a dollar strengthened by US economic data. Stocks fell, with South Korean shares falling on worries that chip demand would weaken.

Data yesterday showed sales of new single-family homes in the United States rose in March to their highest in nearly a year and a half, strengthening the dollar.

MSCI’s emerging-market currencies index slipped 0.1 per cent. Its index of developing-world stocks was last down 0.3 per cent, after dropping to its lowest level in more than a week.

The strong US data and upbeat US corporate earnings results helped lift the dollar, Mizuho Bank analysts wrote in a note.

But comments by US chipmaker Texas Instruments that a slowdown in demand for computer chips could last a few more quarters worried investors in South Korea, which relies on technology exports. Disappointing local corporate results also took their toll.

South Korean stocks slid 0.9 per cent and the won saw its weakest levels since July 2017 before recovering some ground .

Turkey’s lira was 0.6 per cent lower, on track for its worst one-day showing in nearly a week. A local holiday on Tuesday saw the currency largely insulated from that day’s 0.6 per cent rise in oil prices.

“The country not only loses from a higher energy import bill, it loses doubly because the oil price is an important external driver of inflation,” Commerzbank Analyst Tatha Ghose wrote in a note.

“While the central bank confidently proclaims that inflation will trend steadily down beginning H2, renewed lira weakness is already making a dent in this story.”

Turkish stocks traded up 0.3 per cent, mainly on gains among financials and industrials.

Russia’s rouble weakened by 0.4 per cent and equities slipped 0.3 per cent, largely on weakness among energy stocks following a 0.4 per cent drop in oil prices.

South Africa’s rand was 0.6 per cent weaker and stocks dropped half a per cent, on course for their worst one-day performance in about a month.

Concerns about electricity utility Eskom’s finances and impending local elections are weighing on the rand, Nedbank analysts wrote in a note.

Falling gold prices hurt some South African materials stocks, with mining company AngloGold Ashanti’s locally listed shares sliding 2 per cent.

Emerging European currencies were weaker against the euro, with the Hungarian forint and Czech crown each slipping 0.1 per cent against the common currency. — Reuters

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