The MSCI index for developing-nation currencies was around 0.1% lower, with South Africa’s rand and Brazil’s real trailing peers. The dollar rose, along with US Treasury yields. Wednesday’s data offers some relief for investors and could give the Federal Reserve room to ease borrowing costs in the months ahead. Still, markets remain on tenterhooks over the possible impact Donald Trump’s trade policies could have on prices and growth, following several days of wild swings in asset prices.
“The dollar is making a comeback against emerging-market currencies because the lower-than-expected CPI reduces the anxiety over the US experiencing a period of stagflation going forward,” said Juan Perez, an FX strategist with Monex USA. “Now the focus shall be on growth.”
Elsewhere, South Africa’s rand was down roughly 1% against the dollar ahead of the national budget presentation, amid disagreements between the country’s main coalition partners over tax increases and spending. Asian currencies were also broadly lower.
Brazil’s real pared earlier losses and was recently down around 0.1% against the greenback. Earlier, data showed the country’s consumer prices surged the most in three years last month, piling pressure on President Luiz Inacio Lula da Silva to ease shoppers’ pain.
In Poland, improving economic prospects and persistent inflation are likely to prompt the country’s central bank to keep interest rates unchanged for yet another month.
In equity markets, the index for EM stocks rose some 0.1%, led higher by shares of companies listed in Taiwan and South Korea.
In the bond market, Ukraine’s dollar bonds outperformed after Kyiv and US officials agreed on a proposal for a 30-day halt in the conflict with Russia.
