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EM stocks down, HK stocks lead fall
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Romanian leu rises ahead of central bank decision
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Pakistan's rupee falls to record low
By Shashwat Chauhan April 4 (Reuters) - Emerging market stocks dipped for a second straight day on Tuesday, led by declines in Hong Kong shares, while Romania's leu edged higher against the euro ahead of a central bank decision on interest rates.
The MSCI index for EM stocks fell 0.2%, with Hong Kong's Hang Seng index closing down 0.7% as Sino-U.S. tensions weighed. China warned U.S. House Speaker Kevin McCarthy not to "repeat disastrous past mistakes" and meet Taiwan President Tsai Ing-wen. Meanwhile, U.S. President Joe Biden's administration said on Monday it could not confirm reports that China was able to collect real-time data from a spy balloon as it flew over sensitive military sites earlier this year. In a bright spot, the Asian Development Bank (ADB) said developing Asia will grow faster than expected this year, driven by a stronger-than-expected rebound in China. China stocks ended higher on the day.
The Romanian leu edged 0.1% higher against the euro with the National Bank of Romania expected to hold its benchmark lending rate at 7% when it announces its decision at 1300 GMT. "We expect rates to remain unchanged, but also a bit more hawkish tone," said Frantisek Taborsky, EMEA FX & fixed income strategist at ING.
"The macro picture remains relatively positive compared to CEE peers and inflation, while on a bumpy road, is clearly headed lower. The main theme at the moment is rather market liquidity and pressure on FX."
Russia's rouble-based MOEX Russian index rose for the second straight day after a surprise production cut by the Organization of the Petroleum Exporting Countries along with its allies (OPEC+) over the weekend sent oil prices over 6% on Monday. However, the Russian rouble tumbled to its weakest against the dollar in almost a year, hampered by a seasonal drop in foreign currency supply from exporters. Separately, Pakistan's rupee hit a record low of 287 against the dollar, and was last down about 1%. Pakistan posted its highest-ever annual inflation rate over the weekend, while political turmoil continued.
Pakistan's central bank looks set to raise its key interest rate by 200 basis points to a record high of 22% on Tuesday as it struggles to control inflation, which hit a record high in March.
The National Bank of Poland begins its meeting on interest rates on Tuesday and is widely expected to hold rates when it makes its announcement on Wednesday. Later in the day, the Banco Central de Chile will be coming out its decision on monetary policy, with analysts expecting the central bank to hold rates at 11.25%.
The International Monetary Fund (IMF) executive board
lowered Argentina's net reserves accumulation target for the end
of 2023 to $8 billion, in a boost to the government's
beleaguered finances.
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 Shashwat Chauhan and Shreyashi Sanyal in
Bengaluru; Editing by Christina Fincher)
