April 18, 2016 / 10:05 AM / 2 years ago

EMERGING MARKETS-Rouble weakens as oil price fall batters producers

LONDON, April 18 (Reuters) - The rouble fell as much as 3 percent against the dollar on Monday, and emerging stocks’ seven-day long winning streak ended after oil producers’ failure to reach a deal on curbing output pushed crude prices lower.

Brent crude futures sank as much as 4.5 percent to about $41 a barrel after a deal to freeze output at January levels fell apart when Saudi Arabia demanded that Iran join in.

“Reality finally dawned ... that the Saudis are the key market setters for the oil price and they prefer it lower rather than higher, given their geopolitical tussle for regional supremacy with Iran,” Nomura’s Tim Ash said.

The rouble hit a low of 68.80 per dollar while Russian dollar-denominated shares lost almost 3 percent and Russian 5-year credit default swaps rose 10 basis points (bps) to 283 bps according to Markit data.

Neighbouring oil producer Kazakhstan’s tenge fell 2.2 percent and Middle Eastern bourses also came under pressure, with Dubai’s stock index down one percent.

“As long as oil prices suffer just a one day adjustment, it should just be a temporary shift down for the rouble and Gulf equity markets,” Capital Economics senior emerging markets economist, William Jackson, said.

“The key will be whether there’s another leg down.”

In Asia, Malaysia’s ringgit, also highly geared to commodity price moves, touched a near three-week low.

South Africa’s rand fell 0.3 percent lower on the back of weaker metals prices, while stocks lost 0.54 percent.

A South African central banker said at the weekend that persistent breaches of the inflation target would require a policy response.

The benchmark emerging equity index slipped 0.4 percent, with losses across emerging Europe and Asia.

Bucking the trend, Brazil’s London-listed exchange traded equity fund jumped 2.5 percent to a nine-month high and the Brazilian real firmed 0.13 percent against the dollar after Brazil’s lower house voted in favour of impeaching President Dilma Rousseff on Sunday.

Chinese mainland shares fell about 1.4 percent after data showed the economy had expanded by 1.1 percent in the first quarter, the slowest quarterly rate since 2010. Hong Kong stocks lost 0.7 percent.

Adding to regional gloom, Singapore reported a 15.6 percent fall in non-oil domestic exports in March on the back of weak demand.

The losses extended into Europe with Polish stocks down 0.5 percent and Czech shares retreating 0.6 percent.

Poland’s zloty edged 0.15 percent lower, hovering near one month lows against the euro, but the Hungarian forint firmed slightly, near four-week highs hit on Friday.

Ukraine’s dollar-denominated bonds were slightly firmer across the curve, shrugging off comments from the new finance minister who said he might ask the IMF to revise the criteria under which it disburses loans to Kiev.

Elsewhere, Argentina will start book building for its new bond on Monday, as it returns to global capital markets after a 15-year absence.

The yield premium paid by Argentine sovereign bonds over U.S. Treasuries on the JP Morgan EMBI Global index were steady, just off eight-year lows hit last week. Moody’s upgraded Argentina late on Friday to B3 with a stable outlook.

For GRAPHIC on emerging market FX performance 2016, see link.reuters.com/jus35t

For GRAPHIC on MSCI emerging index performance 2016, see link.reuters.com/weh36s

For GRAPHIC on MSCI emerging Europe performance 2016, see link.reuters.com/jun28s

For GRAPHIC on MSCI frontier index performance 2016, see link.reuters.com/zyh97s

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see )

Emerging Markets Prices from Reuters Equities Latest Net Chg % Chg % Chg

on year

Morgan Stanley Emrg Mkt Indx 843.59 -3.11 -0.37 +6.23

Czech Rep 901.34 -5.29 -0.58 -5.75

Poland 1930.37 -9.58 -0.49 +3.83

Hungary 27107.97 -34.29 -0.13 +13.32

Romania 6652.76 -10.13 -0.15 -5.02

Greece 571.00 -3.73 -0.65 -9.56

Russia 880.23 -24.87 -2.75 +16.27

South Africa 46611.62 -151.46 -0.32 +1.78

Turkey 86162.48 +589.22 +0.69 +20.13

China 3034.07 -44.05 -1.43 -14.27

India 25802.67 +175.92 +0.69 -1.21

Currencies Latest Prev Local Local

close currency currency

% change % change

in 2016

Czech Rep 27.01 27.02 +0.03 -0.05

Poland 4.30 4.29 -0.11 -0.87

Hungary 310.38 310.60 +0.07 +1.37

Romania 4.48 4.47 -0.02 +0.96

Serbia 122.80 122.81 +0.01 -1.08

Russia 67.45 66.41 -1.54 +8.15

Kazakhstan 340.27 332.69 -2.23 +0.07

Ukraine 25.45 25.40 -0.20 -5.89

South Africa 14.60 14.56 -0.27 +5.91

Kenya 101.10 101.10 -0.00 +1.09

Israel 3.78 3.78 +0.04 +2.96

Turkey 2.85 2.85 +0.08 +2.32

China 6.48 6.47 -0.09 +0.21

India 66.55 66.65 +0.16 -0.52

Brazil 3.53 3.53 +0.13 +12.23

Mexico 17.59 17.56 -0.17 -2.38

Debt Index Strip Spd Chg %Rtn Index

Sov‘gn Debt EMBIG 421 1 .04 7 15.07 1

Editing by Louise Ireland

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