Emerging market assets have benefited from their exposure to commodities, which have held strong for most of the week against a weaker dollar after the Federal Reserve signalled that it was on the verge of pausing its interest-rate hiking path.
This was also a theme that played in favour of riskier emerging market currencies and stocks that have been pressured by aggressive tightening cycles in the developed world. But worries about the health of the U.S. banking sector lingered, even after U.S. Treasury Secretary Janet Yellen's reassurances that measures will be taken to keep Americans' deposits safe amid a turmoil in the sector sparked by the collapse of two U.S regional banks. "Investors are having a tough time getting a bead on the level of surety on offer to the U.S. banking system from U.S. government officials," said Tim Waterer, chief market analyst at Kohle Capital Markets. "Comments offered by U.S. Treasury Secretary on both Wednesday and Thursday seemed at odds with each other and this is creating uncertainty over what happens if/when the next bank runs into financial troubles." The MSCI's index for currencies dipped 0.5%, falling after three days of gains.
South Africa's rand fell 0.7%, while Russia's rouble weakened 0.6%.
Turkey's lira softened by about 0.2% a day after its central bank held its policy rate at 8.5% as expected, saying it had become even more important to keep financial conditions supportive to preserve growth momentum after last month's devastating earthquakes.
For GRAPHIC on emerging market FX performance in 2023, see For GRAPHIC on MSCI emerging index performance in 2023, see For TOP NEWS across emerging markets For CENTRAL EUROPE market report, see For TURKISH market report, see For RUSSIAN market report, see (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Maju
Samuel)
