Rouble sinks to record lows; Latam FX, stocks slide

  • Morgan Stanley dials back bullish EM bets
  • Polish zloty, Hungary's forint hit record lows
  • S.African rand finds support as gold prices gain
  • Colombian peso, Peruvian sol outperform Latam FX

March 7 (Reuters) - Emerging market currencies slumped on Monday, with Russia's rouble, Polish zloty and Hungarian forint hitting record lows, as oil prices surged on speculation Western nations might ban Russian crude, sparking global inflation fears.

Most currencies in commodity-rich Latin American countries also fell with oil topping $130 per barrel as the United States and European Union mull the possibility of banning Russian oil imports over Moscow's invasion of Ukraine. Russia calls the campaign a "special operation".

"The main concern is that inflation in (Latam) could be higher than expected," said Alberto Rojas, vice president of Latin America Economics at Credit Suisse.

"Countries like Mexico and Colombia have had significant price pressures related to energy and foodstuff items; these pressures are likely to intensify."

Mexico's peso slumped 1.5% to lead losses among Latam peers, while Brazil's real slipped 0.2%.

Outperforming peers, crude exporter Colombia's peso ticked 0.5% higher, while copper producer Peru's sol firmed 0.9%. As gold prices rocketed amid greater appetite for safe-haven bets, South African rand also tacked on 0.2%.

Brazilian energy major Petrobras fell almost 4% despite the oil surge as Brazilian President Jair Bolsonaro on Monday threw his weight behind measures to tamp down domestic fuel prices. read more

Most Latam stock indices fell between 0.5% and 2%, while MSCI's gauge for emerging market stocks (.MSCIEF) sank 3.3%, to hit a 16-month low. The eastern Europe index (.MIME00000PUS) tumbled 13% after its worst weekly performance on record last week.

Morgan Stanley on Monday said it was sticking to its core view that developing economy currencies and select countries' bonds would continue to climb, but was dialling back its bullish bets after November's surge.

The rouble plunged more than 17% to a low of 134.7 against the dollar on the interbank rate. Trading on the MOEX Moscow exchange is likely to remain closed until Wednesday. read more

"The combination of Western sanctions, the rising risk of default and the incentive to divest from rouble-denominated assets will likely further weigh on the currency," said Ipek Ozkardeskaya, senior analyst at Swissquote.

Currencies of central and eastern European (CEE) countries, which are heavily reliant on Russian oil, took a hit.

Hungary's forint slid to an all-time-low of 399.38 against the euro, while the Polish zloty weakened to a record low of 4.99 to the euro.

Meanwhile, analysts fear an impending rate hike by the U.S. Federal Reserve will further strengthen the dollar, potentially hurting emerging market currencies.

Key Latam currencies and stocks at 1909 GMT:

Reporting by Shreyashi Sanyal, Anisha Sircar, Bansari Mayur Kamdar and Susan Mathew in Bengaluru Editing by Mark Potter and Lisa Shumaker

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