EMERGING MARKETS-Turkish lira rises from record lows, EM equities set for monthly decline


By Sagarika Jaisinghani

Sept 30 (Reuters)Turkey’s lira recovered from record lows on Wednesday as the government lowered a tax on foreign currency transactions, while emerging-market equities were set for their first monthly decline since the coronavirus-driven crash in March.

The lira TRY= was at 7.73 against the dollar after slumping to a low of 7.86 in the previous session amid fears Turkey would get dragged into a conflict between Armenia and Azerbaijan over the enclave of Nagorno-Karabakh.

Investors were also assessing a new economic programme laid out by Finance Minister Berat Albayrak on Tuesday that called for a 0.3% rise in output in 2020 despite the pandemic. Analysts doubted some of the forecasts were achievable.

“It is difficult to be confident about the attainability of the government’s end-2021 inflation forecast,” said Berna Bayazitoglu, a Credit Suisse analyst. Some of Albayrak’s responses “exacerbate local depositors’ and non-resident investors’ already-cautious views on the lira,” Bayazitoglu said.

An index of emerging-market currencies .MIEM00000CUS rose 0.1% but was on course to end September with its smallest monthly gains in four, as a strengthening dollar and surging coronavirus cases kept risk appetite subdued.

“The latter development, in particular, means that our year-end forecasts for EUR-PLN and EUR-HUF are subject to significant upside risk,” FX analysts at Commerzbank said.

The Polish zloty EURPLN= and the Hungarian forint EURHUF= were up against the euro on Wednesday but were set for monthly declines of more than 2% each.

Russia’s rouble RUB= rose 0.8% after slumping to a six-month low against the dollar in the previous session on growing geopolitical concerns as well as a surge in domestic COVID-19 infections.

The rouble could get support from state-run companies that have been told to revise their limit of net foreign exchange assets, which should encourage them to buy roubles, Interfax news agency reported late on Tuesday. RU/RUB

The South African rand ZAR= rose 0.3% after sliding as much as half a percent in early trading. Data showed headline consumer price inflation slowed to 3.1% year-on-year. ZAR/

A basket of developing-world equities .MSCIEF rose 0.4%, driven by gains in Hong Kong .HSI, South Korea .KS11, Taiwan .TWII and Turkey .XU100.

Still, the index was set to snap a five-month winning streak as global economic data signalled a choppy recovery from the health crisis.

For GRAPHIC on emerging market FX performance in 2020, see http://tmsnrt.rs/2egbfVh

For GRAPHIC on MSCI emerging index performance in 2020, see https://tmsnrt.rs/2OusNdX

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB

(Reporting by Sagarika Jaisinghani in Bengaluru; editing by Larry King)

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