EM assets bounce after sharp falls, rouble slips on oil ban

Article content

March 9 – Most emerging market currencies and stocks bounced on Wednesday from sharp falls amid the Ukraine crisis and fears of rising inflationary pressures, while Russia’s rouble tumbled as the United States slapped an import ban on its oil.

U.S. President Joe Biden on Tuesday imposed an immediate ban on Russian oil and other energy imports in retaliation to Russia’s invasion of Ukraine.

The rouble tumbled more than 15% in Moscow as it resumed local trading for the first time this week, while its interbank rate fell over 5% by 0926 GMT.

Article content

In its latest step to ease pressure on the rouble, Russia’s central bank said on Tuesday citizens with foreign currency accounts would not be allowed to withdraw more than $10,000 in total over the next six months. Last week, the bank had reduced the commission for buying foreign currency through brokers to 12%.

“The rouble remains under pressure, while all the new controls on currency transactions are alienating the exchange rate at home and on global FX,” said Alex Kuptsikevich, a senior financial analyst at FxPro, adding that Russia’s economic landslide is continuing with extreme speed.

Fitch on Tuesday further downgraded Russia’s sovereign rating by six more notches into the junk territory.

The sanctions have not only triggered a rally in commodity prices, but have generated more margin calls at trading firms, sparking fears of a spillover into the broader financial world and raising global inflationary pressures.

Article content

Still, assets of some commodity-rich countries have benefited from the surge. The South African rand, Brazilian real and the Colombian peso were all set to rise for the week.

The rand added 0.7% on a gold price rally, though gains were limited by deeper power outages by local utility Eskom and war concerns.

The MSCI’s index for emerging market stocks was up 0.5%, for the first time in four days, while its currencies counterpart added 0.2%.

Currencies of major oil-importers such as Turkey’s lira , Hungary’s forint and Poland’s zloty have lost more than 5% each since Russia’s invasion.

Worries about the war have also pushed foreign investors to sell around $1.19 billion of Egyptian treasury bonds in just three days, with JPMorgan on Tuesday saying a steep devaluation of Egypt’s pound was likely required and that it may need more assistance from the International Monetary Fund. EG207984663=>

Article content

“Across other EM markets, there is a concern or even pessimism about the medium-term outlook, but some relative easing of the fear level is striking in the stock markets today,” Kuptsikevich added.

For GRAPHIC on emerging market FX performance in 2022, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2022, see https://tmsnrt.rs/2OusNdX

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see (Reporting by Shreyashi Sanyal and Anisha Sircar in Bengaluru; Editing by Krishna Chandra Eluri)