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EM stocks down 1.2%, FX down 0.2%
Zambia announces debt restructuring deal with bondholders
South Africa’s September PPI data awaited
Decision on Turkish C.Bank rate due at 1100 GMT
By Johan M Cherian
Oct 26 (Reuters) – Concerns about U.S. interest rates staying high for a longer period of time fueled a selloff in most emerging markets on Thursday, sending stocks to an 11-month low, while investors awaited Turkey’s interest rate decision. Was doing.
MSCI’s index tracking EM shares fell 1.2% as yields on the US 10-year term, a symbol of interest rate expectations, rose by 0909 GMT.
Equities in developing markets are hovering near lows last seen in November as investors’ borrowing costs soared amid signs of a resilient US economy.
Such expectations strengthened the dollar, causing a basket of emerging markets currencies to fall 0.2% to the lowest in nearly a week.
Turkey’s monetary policy decision will be in close focus on Thursday, as economists expect a 500 basis point hike in keeping with a recent pivot to broadly conservative policy.
The lira traded at 28.1 against the dollar ahead of the decision at 1100 GMT.
“It is clear that the authorities are weighing the tradeoff between some of the legacy issues of the previous economic machine in terms of the banking sector and the pressure on the lira from the rise in US yields (which means relative interest rate differentials),” said senior EM strategist at BankInvest. “Steps are being taken against him,” Jacob Ekhold Christensen said.
Market participants are also keeping a close eye on the Israel-Hamas conflict, and the impact the escalating conflict could have on oil supplies from the region, a key resource for developing markets.
In Central and Eastern Europe, rate-setter Joanna Tyrowicz said domestic inflation would be higher in November and December. Poland’s zloty was little changed against the euro, adding that she still expected support for more restrictive monetary policy. Can get majority to do.
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The Hungarian forint rose 0.4% after two consecutive sessions of losses.
Meanwhile, South Africa’s rand eased 0.2% ahead of September producer inflation (PPI) data, where economists expect it to rise to 4.7%.
The country’s top index fell 1.0% after the pharmacy chain reported a jump in annual earnings, leading Clix Group to rise 6.1%.
Elsewhere, Zambia’s international dollar bonds rose as much as 2.5 cents, according to Marketex, after the finance ministry said it had reached an in-principle agreement on debt restructuring terms with the lender group that holds the bonds. (Reporting by Johan M Cherian in Bengaluru; Editing by Varun HK)