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LONDON, July 19 (Reuters) – Trade war concerns and dollar strength continues to cast a shadow over emerging market currencies on Thursday, with a weakening in the US of a central bank meeting.
Other emerging currencies such as the Indian rupee and Turkish will also see the index rose by 0.3 percent, approaching one-year highs.
The dollar has been supported by U.S. Federal Reserve chairman Jerome Powell's upbeat testimony this week, providing headwinds for emerging markets outlook outlook.
At the same time, Powell warned that lower prices, lower investment, lower productivity, and stagflation.
Worries about more protectionist world has weighed on emerging markets, which are dependent on free trade and strong exports for growth. MSCI's benchmark emerging stocks index fell 0.6 percent, its third day of losses this week, with selling across Asia and emerging Europe.
With China taking the biggest hit from U.S. tariffs to date, China's yuan fell almost 0.9 percent, hitting a one-year low of 6.77 per dollar in onshore and 6.78 in offshore trade.
The moves came after the official midpoint was set below 6.7 per dollar, with the central bank in the bankruptcy ratio (RRR) cuts in coming months.
Koon Chow, emerging markets strategist at UBP, said the depreciation was surprising, and should not be interpreted as a "firing shot" in the trade spat with the United States.
"If you allow the yuan to depreciate it intensifies tensions with the United States," he said, highlighting China's trade surplus with the US, which hit a record high in June.
"Weakening your exchange rate is an adversarial action, and that's inconsistent with what they've done in the last two weeks – they've complained about the US threats but they have not reacted."
China capitalization, with China's forex regulator, "counter-cyclical" measures to respond to short-term volatility, highlighting its "ample" reserves.
Chinese mainland and Hong Kong stocks with the Shanghai Composite index down 0.5 percent and Hong Kong fell 0.4 percent.
Chinese inflation weighed on other Asian markets, with the Indian rupee down 0.5 percent, heading back towards record lows. Indonesia's rupiah fell 0.5 percent, trading around its weakest level in nearly three years, as at 5.25 percent as expected.
Away from Asia, The South African Reaching A Tough Rising Falling Into Reaching Rise.
Headline Consumer Inflation Quickened to 4.6 percent year-on-year in June from 4.4 percent in May.
But John Ashbourne, Senior Emerging Markets Economist at Capital Economics, noted that core inflation is slowing down from 4.4 percent to 4.2 percent, which is expected to increase.
"We think that we will decline over the remainder of the year," he said.
The Turkish lira retreated 0.8 percent after a three-day rally while Mexico's peso fell 0.6 percent. U.S. President Donald Trump has said that the US is seeking a separate trade deal with Mexico, sowing fresh doubts about the future of NAFTA.
Russia's ruble also dipped 0.6 percent to a two-week lows, as investors eyed the possibility of more U.S. sanctions.
A momentum gaining momentum in the US Senate suggests that sanctions targeting key economic sectors would have to be decided in the United States.
Moscow shares fell 0.4 percent and Russian dollar-denominated stocks fell 0.8 percent. UBP's Chow said any new penalties were likely to be of a different nature to those of Rusal, which had had unintended consequences such as disruption to global aluminum supplies.
For GRAPHIC on emerging market FX performance 2018, see tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2018, see tmsnrt.rs/2dZbdP5
For TOP NEWS across emerging markets
For CENTRAL EUROPE market report ,
For TURKISH market report, see
For RUSSIAN market report, see) Emerging Markets Prices from Reuters Equities Latest Net Chg% Chg% Chg
on year
Morgan Stanley Emrg Indx Mkt 1063.03 -5.72 Czech Rep. 1086.87 -0.49 -0.05 +0.81
Poland 2139.08 -10.04 -0.47 -13.09
Hungary 34661.20 -59.11 -0.17 -11.98
Romania 7886.10 -104.05 -1.30 +1.71 19659002] Greece 768.58 -5.20 -0.67 -4.21
Russia 1135.89 -8.83 -0.77 -1.61
South Africa 49876.61 -292.13 -0.58 -5.06
Turkey 92479.97 +158.01 + 0.17 -19.81
China 2772.98 -14.28 -0.51 -16.15
India 36335.53 -37.91 -0.10 +6.69
Currencies Latest Local Local Prev
close currency currency
% change% change
in 2018
Czech Rep 25.86 25.83 -0.12 -1.29
Poland 4.31 4.31 -0.16 -3.20
Hungary 324.91 323.93 -0.30 -4.43
Romania 4.65 4.65 -0.02 +0.52
Serbia 117.86 117.86 +0.00 +0.46
Russia 63.36 62.99 -0.58 -9.00
Kazakhstan 345.71 344.96 -0.22 -3.73
Ukraine 26.45 26.29 -0.60 +6.41
South Africa 13.38 13.26 -0.88 -7.63
Kenya 100.70 100.55 – 0.15 +2.38
Israel 3.65 3.64 -0.25 -4.60
Turkey 4.83 4.79 -0.86 -21.62
China 6.77 6.72 -0.82 -3.91
India 68.98 68.62 -0.52 -7.47
Brazil 3.85 3.85 +0.00 -13.99
Mexico City 18.99 18.89 -0.51 +3.48
Index Debt Strip Spd Chg% Rtn Index
Sov'gn Debt EMBIG 361 0 .02 7 79.78 1
Reporting by Claire Milhench; Editing by Hugh Lawson
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