EMERGING MARKETS-Turkish lira leads FX losses ahead of U.S. payrolls

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* EM FX is set for a fifth consecutive weekly loss

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* Lira slides to new record low

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* Chinese property bonds, stocks fall

October 8 (Businesshala) – Most emerging market currencies fell on Friday ahead of key US payrolls data, while Chinese stocks rose after a week off, even as concerns over property market debt default persisted.

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The Turkish lira slipped 1% to a record low of 8.9650 against the dollar, and was the worst-performing emerging market (EM) currency on the day, after a Businesshala report suggested that President Tayyip Erdogan’s central bank He sacked his predecessor less than seven months after the U.S. governor was losing confidence in Sahap Cavioglu.

Erdogan had gone through a string of central bank presidents over the past two years to enforce his unorthodox view that high interest rates cause inflation, which pushed prices down while pushing the lira to record lows. have seen growth.

Broader EM currencies slipped as investors took a cautious approach ahead of US payrolls data later in the day. A stronger-than-expected reading could reaffirm the Federal Reserve’s confidence in the US economy, and could push the bank into tougher policy earlier than indicated.

MSCI’s emerging market currencies index fell 0.2%, and was set for a fifth straight week of losses as concerns over sluggish economic growth in China and credit problems drove investors out of risk.

US Treasury yields and the dollar strengthened ahead of the announcement, while a temporary increase in the US government’s debt limit also helped sentiment.

“The US employment report for September could prove to be the determinant on whether the Fed will begin to ease its quantitative easing (QE) purchases next month,” Charlambos Pesoros, head of research at JFD Group, wrote in a note.

“(A more decent report than in August) could encourage market participants to bet on a short November QE by the Fed, and perhaps even up their expectations of when the first interest rate hike occurs.”

Chinese stocks rose after a week-long holiday, helped by encouraging services sector data and easing political tensions with the United States.

But bonds and shares issued by Chinese property firms fell amid some indications of how regulators are aiming to prevent contagion from the debt problems of China Evergrande Group, the country’s second-largest developer.

Russia’s ruble slipped 0.4%, while shares rose 0.2%. Shares of heavyweight oil and gas producer Gazprom slipped 1% as a fire forced it to shut down operations at its Amur gas processing plant.

Most Central European currencies fell slightly against the euro. Expectations of interest rate hikes in the sector rose as the data showed an increase in inflation.

For a graphic on emerging market FX performance in 2021, see tmsnrt.rs/2egbfVh

Look for a graphic on MSCI’s emerging index performance in 2021 tmsnrt.rs/2OusNdX

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For the Russian market report, see (Reporting by Amber Warik Editing by Robert Birsel)


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