EMERGING MARKETS-Turkish lira eases as data shows high inflation, rouble steadies
* Turkish lira falls for fourth straight session
* Rouble flat after worst session in nearly three months
* South African rand up even as private sector activity contracts
* Fall in Chinese stocks weighs on EM index
By Sagarika Jaisinghani
Sept 3 (Reuters) – The Turkish lira eased for a fourth straight session on Thursday as data showed elevated inflation in August, while the Russian rouble steadied following steep losses in the previous session after Germany said Kremlin critic Alexei Navalny was poisoned.
The rouble was nearly flat against the dollar after falling 2.6% on Wednesday as German Chancellor Angela Merkel said Navalny was the victim of a murder attempt with the Novichok nerve agent and that Russia must answer “difficult questions”.
Russian assets were already under pressure in the past few weeks due to protests and strikes in neighbouring Belarus. On Thursday, the rouble-based MOEX Russian stock index rose for only the second time in six days as data showed steady growth in the country’s services sector.
An index of emerging market currencies eased 0.1%, with the Turkish lira losing 0.5%, as data showed year-on-year inflation of 11.77% in August, well above an official target after the currency tumbled to a series of record lows last month.
“Economic recession was supposed to dampen inflation, but this has not generally panned out; meanwhile, growth is re-accelerating across the region and Turkish local monetary policy has remained easy,” said Tatha Ghose, FX analyst at Commerzbank.
“There are no drivers in place to bring inflation magically down to help support the lira (and) the inflation-FX spiral is worsening.”
The lira has lost about 20% against the greenback in 2020 – two years after a full-blown currency crisis – despite constant central bank intervention, and is among the worst performing European emerging market currencies so far this year.
The South African rand was a touch firmer even as data showed private sector activity contracted for the 16th straight month in August, fuelling concerns about the ability of Africa’s most industrialised economy to shake-off recession and a fiscal crisis.
Among eastern European currencies, the Czech crown was nearly unchanged to the euro as data showed the unemployment rate last month was unchanged at 3.8%. The Hungarian forint firmed 0.1%, while the Polish zloty shed 0.1%.
A basket of developing world stocks eased 0.2%, weighed down by a slide in Chinese stocks as investors pulled out of high-flying consumer firms on worries over lofty valuations.
Turkey stocks rose 0.6%, while the South African bourse shed 0.7%.
For GRAPHIC on emerging market FX performance in 2020, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2020, see tmsnrt.rs/2OusNdX
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