LONDON Jan 14 The rouble hit a 4-1/2 year low
against its dollar-euro basket on Tuesday after Russia's central
bank said it would scale back its forex interventions, while the
lira tested a new record low as Turkey's current account deficit
Broader emerging markets also slipped, taking their cue from
a firmer dollar and Wall Street's 1.2 percent decline late on
Monday, with MSCI's main emerging equity index down
half a percent.
Emerging markets have been under pressure for more than six
months on expectations - which become reality this month - that
the Federal Reserve will scale back its bond-buying programme,
encouraging investors to return home.
"A lot of foot-loose institutional capital has gone into
emerging markets, and we're not sure that has come out yet,"
Kevin Gardner, European CIO at Barclays Wealth, told a briefing.
"Markets have cheapened up, but we are not yet too bullish
on EM stocks."
Russian stocks fell more than 1 percent, but
losses in the broader index were tempered by gains in its
largest constituent, China. Mainland Chinese shares broke a
four-day fall to end 0.9 percent higher.
The rouble hit 4-1/2 year lows against its
dollar-euro basket and four-month lows against the dollar after
the central bank said on Monday it would end 'targeted'
interventions on the currency market as part of a strategic
shift towards letting the rouble float freely.
The reduction to zero of its interventions, which had been
set at $60 million per day, will increase the flexibility of the
exchange rate corridor used by the central bank and reduce its
presence on the market.
"As rouble volatility rises, the spot is likely to weaken at
current interest rate levels," Commerzbank analysts wrote in a
The lira fell more than half a percent to the dollar
and Turkish stocks dropped more than 1 percent
following data showing the current account deficit widened to
$3.94 billion in November. The widening came in below
"The good news is that the deteriorating trend has stopped,
the bad news is that the deficit remains very large," said Tim
Ash, emerging markets strategist at Standard Bank, in a client
Egyptian stocks jumped nearly 2 percent before
trimming gains as voting began in a constitutional referendum
which is likely to lead to a presidential bid by army chief
General Abdel Fattah al-Sisi.
Egypt's stock market has soared nearly 5 percent in the past
few trading sessions to their highest since May 2010.
The Ukrainian hryvnia hit its lowest in more than
four years following weekend anti-government protests
Emerging sovereign debt spreads edged out by 1 basis
point to 341 bps over U.S. Treasuries, with Romania planning 10-
and 30-year dollar bonds, according to Thomson Reuters news
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see )