Emerging currencies strengthen

AP Photo/Mark Lennihan, File

AP Photo/Mark Lennihan, File

Published Jan 23, 2017

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Cairo - Emerging-market stocks and currencies headed for

the highest levels in 11 weeks as US President Donald Trump’s first days in

office produced no policy announcements to buoy the dollar.

Shares in the Philippines led gains, with the benchmark

index set for the highest close in almost three months. Ukraine’s hryvnia

advanced the most among developing peers. The Bloomberg Dollar Spot Index

retreated 0.6 percent, taking its loss since early January to 2.5 percent.

The dollar “rose a long way very quickly on little more

than hopes and dreams,” said Mark Cudmore, a Bloomberg strategist

based in Singapore. “If those hopes are not at least partially fulfilled

quickly, the dollar may correct sharply.”

Currencies

The MSCI Emerging Markets Currency Index advanced 0.4

percent to the highest level on a closing basis since Nov. 9. The hryvnia

gained 0.9 percent, heading for its strongest level since Jan. 5. South

Africa’s rand added 0.6 percent.

Stocks

MSCI’s gauge of stocks rose 0.6 percent to the highest

level on a closing basis since Nov. 8. Philippines Stock Exchange PSEi Index

jumped 2 percent, set for the highest close since October 28. Saudi Arabia’s

Tadawul All Share Index increased 0.8 percent, climbing for a third day.

What to watch

Israel’s central bank is due to announce its interest

rates decision at 4 p.m. in Tel Aviv. No change is expected, according to

economist estimates compiled by Bloomberg. For data and events, see Asia

Daybook, India Daybook, Taiwan Daybook, Middle East Daybook, Russia Daybook,

Africa Daybook, South Africa Daybook. Oil held a two-day advance after OPEC and

other producing nations agreed on a way to monitor compliance with their

pledged output cuts.

Analysis

Asian currencies are likely to maintain a pattern of

weakening in the first 100 days after the new US president takes office,

especially due to "Trump’s focus on the economy and trade protectionism

during his inauguration," HSBC Asian currency strategist Alastair Pinder

said in a research note. The Bank of Russia will resume interest rate cuts only

in March, despite pressure from an appreciating ruble, Bank of America

economist Vladimir Osakovskiy said in a research note

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