EMERGING MARKETS – Ruble Leads Emerging Markets FX Higher On Gains in Oil, China Data Boosts Inventories


* Emerging market equities at strongest level since March 2018

* Turkish stocks at an all-time high

* All eyes on Turkey, meetings of the central bank of South Africa

Nov 16 (Reuters) – The Russian ruble stabilized for the first time in five days on Monday as oil prices jumped on hopes of sustained production cuts, as emerging market equities jumped to a high of more than two. years on the signs of economic recovery in China was gaining momentum.

The ruble gained 0.9% to 76.90 against the dollar by 0922 GMT after easing last week due to an increase in global coronavirus cases and as data showed Russian GDP shrinking in the third quarter .

The ruble had a volatile few weeks, plummeting to its lowest against the euro since late 2014 on the eve of the US election and then posting its largest one-day gain against the dollar in four years the day after the vote.

The Turkish lira was largely unchanged ahead of a central bank meeting later this week, where analysts expect a sharp rise in interest rates that could ease the pressure on the exchange rate and, in turn, on inflation.

“Of the two, Turkey is definitely more exciting to watch,” said Piotr Matys, an emerging markets FX strategist at Rabobank, referring to central bank meetings in Turkey and South Africa.

The lira rallied around 11% last week in its best week in over 19 years, as a major jolt in the country’s economic leadership gave hope for more immediate measures to support the battered currency.

“The new governor is fully aware that there is no room for him to disappoint the market. I expect a 500 basis point increase in effect in the one week repo rate, ”Matys said.

Turkish equities rose 1.3% to a record high with sentiment also receiving a boost from data showing an increase in production in the automotive sector.

The South African rand, widely regarded as a proxy for emerging market risk, was up 0.6% against the dollar, while stocks were up 0.2%, helped by gains from energy giant Sasol.

Emerging market equities in Europe, the Middle East and Africa posted solid gains across Asia after better-than-expected China industrial production data, with the MSCI Emerging Markets Index up 1.3 % at the latest from 22 March 2018.

On Friday, Fitch downgraded his outlook on Belarus to negative, saying more political turmoil could lead to further pressures on international reserves and deposit outflows.

For GRAPHIC on the performance of emerging currency markets in 2020, see tmsnrt.rs/2egbfVh For GRAPHIC on the performance of MSCI emerging indices in 2020, see tmsnrt.rs/2OusNdX

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For the RUSSIAN market report, see (Reporting by Shriya Ramakrishnan in Bengaluru; additional reporting by Sagarika Jaisinghani; Editing by Subhranshu Sahu)


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