LONDON Feb 21 Ukraine's dollar bonds rose off
record lows on Friday on expectations of a deal to resolve
conflict over the country's political future, dragging up the
hryvnia's exchange rate to the dollar.
The gains come despite a fresh delay to the second tranche
of a Russian loan that stands between Kiev and a debt default
and doubts over the viability of a deal between President Viktor
Yanukovich and the pro-Europe opposition..
After all-night negotiations mediated by visiting European
Union foreign ministers, aimed at calming street violence in
which at least 75 people have died in two days, the presidential
press service said an agreement would be signed at noon (1000
Debt insurance costs on Ukraine, which had hit their highest
since 2009, also fell 40 basis points, while the hryvnia firmed
Ukraine's 2017 dollar bond UA080875819= rose almost 2 points
to 86 cents in the dollar, off recent record lows of 83,
according to Reuters data. Its June 2014 issue
rose a point, according to Tradeweb, while the 2023 bond
was 1.5 cents higher.
"The market is pricing in a deal with the opposition," RBS
analyst Tatyana Orlova said. "But this is not the end of the
story. What I am reading is there is a deal but the devil is in
the detail ... The urgent need is for a technocratic cabinet
that could take steps to avert default."
The Russian rouble also firmed slightly, helped by hopes for
a deal in Ukraine as well as by end-month tax payments which
lifted the Russian currency 0.2 percent off the five-year lows
hit earlier this week.
But Orlova said the strength would be shortlived.
"Preliminary data shows the population has started
converting rouble deposits into hard currency which is a very
negative trend. If it continues, weakening pressure on the
rouble will resume," she added.
Elsewhere the Nigerian naira fell 1 percent in volatile
trade, a day after respected central bank governor Lamido Sanusi
was suspended by the president.
Central banker Doyin Salami said Nigeria would be able to
defend the naira with $41 billion in reserves.
On stock markets, MSCI's main index rose 0,6
percent off one-week lows. However Chinese mainland stocks
erased their weekly gains on back of the yuan's biggest weekly
drop since 2012 which has sparked debate on whether the
currency's trading band will be widened.
The emerging markets index was on track for a weekly loss
after two weeks of gains while emerging equity funds chalked up
their 17th straight week of outflows.
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