Emerging Currencies Strengthen on Scant Signs of Trump Stimulus

• Emerging Currencies Strengthen on Scant Signs of Trump Stimulus

Emerging-market stocks and currencies headed for the highest levels in 11 weeks as U.S. 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.”

Markets Live: No Dollar Support Soon as Yen Leads the Attack

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 Oct. 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 U.S. 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.