Falling oil prices heaped more pain on commodity-exporting emerging markets on Wednesday, with Nigeria’s naira brushing off recent central back action to extend losses though the rouble held off record lows.
Russia’s central bank has ended regular, targeted interventions to defend the rouble and key figures, including President Vladimir Putin, have made statements in support of the currency. That has raised the prospect of big, ad hoc dollar sales that would effectively squeeze out short rouble positions.
The rouble was quieter against the dollar and euro following steep falls in the previous session and a near-30 percent loss versus the dollar this year.
“The market is trying to digest all the new moves that were announced by the central bank which has done the right thing by abolishing the FX corridor,” said Murat Toprak, emerging markets strategist at HSBC.
Oil exporter Nigeria’s naira fell half a percent, a day after the central bank sold dollars.
Hard currency reserves have slumped to four-month lows and three-month forwards are pricing the naira at 176 per dollar versus the spot rate of 169.
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Stronger-than-expected manufacturing data published Tuesday failed to buoy South Africa’s rand. The market, like many others, has suffered from investors being tempted away by better prospects offered by a strong dollar as commodity prices damage the outlook for many emerging economies.
“In emerging markets… local factors are not really at play, it’s more a matter of the dollar going up or down,” Toprak said.
Ukrainian debt insurance costs hit five-year highs with 5-year credit default swaps rising 43 basis points from Tuesday to 1,392 bps, Markit said.
In the Gulf, Saudi stocks rose close to 0.5 percent, lifted by a 10 percent surge in the National Commercial Bank on its first trading day after a $6 billion listing.
Central Europe’s biggest economy, Poland, saw the zloty weaken 0.3 percent ahead of October inflation data which is likely to make the case for interest rate cuts.
Earlier, South Korea’s won hit a 14-month low as a sinking currency in Japan – its main export market – sparked concerns about where growth will come from.
Reuters
