Tuesday, March 28, 2023

EMERGING MARKETS-Commodity currencies rally; Russian rouble firms in offshore market

    * Sanctions increase Russia's debt default risk - JPM
    * Powell says U.S. Fed on track to hike rates this month
    * Latam currencies, stocks rally on commodities boost 

 (Adds comment, details; updates prices)
    By Susan Mathew and Bansari Mayur Kamdar
    March 2 (Reuters) - Currencies of commodity-exporting
economies rallied on Wednesday as oil and metal prices soared in
the aftermath of stinging sanctions on Russia over its invasion
of Ukraine, while the rouble widened its divergence between
onshore and offshore trading. 
    The Russian currency closed Moscow trading at
106 per dollar after hitting a new low of 110, while in the
interbank market, the currency jumped almost 10% in extended
trade to below 100 a dollar.
    Market experts see this trend continuing given the
restrictions on transactions with Russia.
    In a matter of weeks, Russia has gone from a lucrative,
oil-rich investment destination to a financial pariah. Risks of
Russia defaulting on its debt also increased.
    Russian stocks haven't traded this week but ETF's
 have tumbled to record lows. Several big
global brands, including energy major Exxon and
planemaker Boeing have suspended operations in Russia as
it rages on with its attack on Ukraine.
    Benefiting from the crisis were oil exporters, as crude
prices jumped over $110 a barrel on expectations that the market
will remain short of supply for months to come. Metal prices
also rose on fears sanctions could hit supply.
    But these also stoked inflation worries.
    "The developing world and the raw material based world could
rise, but because of this conflict, it's going to be on a very
idiosyncratic basis," said Juan Perez, senior currency trader at
Monex USA. 
    "So in each country it is going to matter whether they can
pull against the dollar or push." 
    Currencies of Mexico, Brazil and Colombia
 rose between 0.3% and 1.2% with gains also aided by the
dollar retreating slightly. Top copper producers Chile
and Peru saw their currencies track a surge in prices of
the red metal.
    Commodity-rich South Africa's rand gave up session
losses to trade 0.7% higher. MSCI's index of emerging market
currencies reversed session losses of up to 0.3%
to trade 0.1% higher. 
    But currencies of oil importers such as Turkey fell,
as did those in central and eastern Europe due their proximity
to the war in Ukraine.
    Among stocks, Latin American equities outperformed broader
peers with expectations of a less hawkish U.S. Federal
Reserve also aiding stocks globally.
    Brazil markets returned after an extended weekend, with
stocks jumping 1.8%, on track for their best session in
more than five weeks. Mining major Vale and oil giant
Petrobras were the biggest boosts. 
    Latin American stock indexes and currencies at 1945 GMT:
   Stock indexes            Latest    Daily %
 MSCI Emerging Markets       1173.10    -0.28
 MSCI LatAm                  2432.98     1.99
 Brazil Bovespa            115164.82     1.79
 Mexico IPC                 53210.82     0.08
 Chile IPSA                  4487.37     1.18
 Argentina MerVal           90312.07    2.663
 Colombia COLCAP             1531.40    -0.47
       Currencies           Latest    Daily %
 Brazil real                  5.1031     0.98
 Mexico peso                 20.6097     0.12
 Chile peso                    805.8     0.06
 Colombia peso               3834.01     1.17
 Peru sol                      3.749     0.72
 (Reporting by Susan Mathew, Bansari Mayur Kamdar, Shreyashi
Sanyal and Anisha Sircar in Bengaluru; Editing by Toby Chopra,
Bernadette Baum and Grant McCool)


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