Most currencies rise as dollar stalls; Israel and Lebanese bonds up

Reuters

Most currencies rise as dollar stalls; Israel and Lebanese bonds up

Nov 27, 2024 at 9:48 am GMT

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Elections in Namibia on Wednesday

Mexican peso continues to fall after Tuesday's drop

EM stocks up 0.3%, FX adds 0.1%

By Shashwat Chauhan

Nov 27 (Reuters) -Most emerging market currencies appreciated against the dollar on Wednesday as the greenback's rally stalled, while Israel and Lebanon's hard-currency bonds rose after a ceasefire between Israel and Hezbollah came into effect.

Lebanon's dollar-denominated sovereign debt inched higher across the board, with the 2031 maturity XS1720805537=TE leading gains, last bid at 9.3 cents on the dollar, as per Tradeweb data.

Israel's shekel ILS= held firm at 3.64 per dollar, while its hard-currency international bonds were on the rise. The 2120 maturity US46513JB593=TE hit a more than eight-week high, and was last up 0.73 cents on the dollar at 72.9 cents.

Mexico's peso MXN= was last down 0.3%, a day after hitting its lowest level in more than two years when Trump said he would impose a 25% tariff on imports from Canada and Mexico.

"Ultimately, the economic cost of tariffs has to be borne somewhere: in devaluation of the exporter country's currency, lower profit margins for exporting companies, and/or inflation in the U.S.," said Hasnain Malik, head of equity research at Tellimer Research.

In emerging Europe, most currencies were flat-to-lower against the euro, though they broadly appreciated against the dollar with Poland's zloty PLN= up 0.2%.

South Africa's rand ZAR= was up 0.4% against the dollar after falling more than 0.7% on Tuesday, while Russia's rouble RUB= was pinned near its lowest level since March 2022.

MSCI's gauge for emerging market stocks .MSCIEF was up 0.3% as of 0920 GMT, boosted by rising Asian heavyweights.

China's blue-chip CSI 300 .CSI300 closed more than 1.7% higher, while Hong Kong's Hang Seng .HSI jumped more than 2% after data showed that declines in industrial profits narrowed.

Emerging markets are in for a tough and uncertain year due to policy shifts in the United States and uncertain growth in China, JPMorgan said in its annual outlook, predicting emerging markets bond funds were in line for sizeable outflows.

Investor focus would be on a U.S. inflation reading later in the day, which could be key in gauging the Federal Reserve's interest rate path.

Fed officials appeared divided at their meeting earlier this month over how much farther they may need to cut rates, but as a group agreed to avoid giving much guidance on about how U.S. monetary policy is likely to evolve.

Citizens of Namibia are headed to the polls on Wednesday to elect a new president and parliament in what could be a tough election to win for the ruling SWAPO party.

In Sri Lanka, the country's central bank set a new single policy rate of 8%, easing monetary settings below previously used benchmarks.

Credit ratings agency Moody's upgraded El Salvador's credit rating to 'B3', stating that the Central American nation's credit profile benefited from recent liability management operation.

HIGHLIGHTS:

** Georgian ruling party nominates hardline ex-soccer player for president

** China state media warn Trump against mutually destructive tariff war

For GRAPHIC on emerging market FX performance in 2024 http://tmsnrt.rs/2egbfVh

For GRAPHIC on MSCI emerging index performance in 2024 https://tmsnrt.rs/2OusNdX

Reporting by Shashwat Chauhan in Bengaluru; Editing by Varun H K

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