LONDON Jan 17 The Turkish lira hovered near
record lows and the South African rand near five-year lows on
Friday, with deficit countries continuing to suffer from a
scheduled withdrawal of U.S. monetary stimulus.
Turkey and South Africa are among the countries most reliant
on foreign investor flows and have been hit by the reduction
from this month of the Federal Reserve's bond-buying programme
that had boosted riskier assets.
Local events have also been negative for these countries in
recent days, with Turkey in the throes of a corruption scandal
and manufacturing data this week in South Africa showing a
contraction in December.
The central bank has also held back from raising rates in
Turkey, although prices have been rising.
"It has shown more tolerance for a weak currency but
eventually will have to raise interest rates because of
inflation," said Salman Ahmed, global strategist at Lombard
Odier Investment Managers.
The lira dipped 0.13 percent towards record lows set
on Thursday and the rand steadied above the previous
session's five-year lows.
The rouble tested 4-1/2 year lows against its dollar-euro
basket and hit fresh four-month lows against the
dollar after the central bank said this week it was cutting
"targeted" interventions as part of a strategic shift towards
letting the rouble float completely freely.
The Serbian dinar fell slightly after Fitch cut
the country's rating to B+ from BB-, citing deteriorating public
finances and debt ratios.
The Ukrainian hryvnia tested four-year lows after
supporters of Ukrainian President Viktor Yanukovich rammed a
sweeping law through parliament on Thursday in an attempt to
curb anti-government protests.
Ukrainian assets have rallied in recent weeks after the
country got a $15 billion bail-out from Russia.
"This new legislation... comes in the aftermath of the
biggest anti-government protest in almost 10 years and risks
causing the rallies to flush again," said analysts at SEB in a
But emerging equity and debt markets were generally stable
ahead of U.S. data later on Friday including industrial
production and housing starts.
The MSCI emerging equities index was steady, on
course for a small 0.5 percent gain this week, and emerging
sovereign debt spreads tightened by 2 basis points to
345 bps over U.S. Treasuries.
China shares, however, sank to their lowest in
5-1/2 months, as the resumption of initial public offerings
sapped already limited liquidity and concerns about shadow
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see )