The Central Bank of Peru raised interest rates to 6.75%
* China’s inflation in August reduced demand for Covid-19
* European Union members to debate on Russian gas prices
Sept 9 (Reuters) – As the dollar pulled back from recent highs on Friday, emerging market currencies strengthened, led by Chinese shares higher as stocks showed more encouragement from Beijing.
MSCI’s index of emerging market (EM) currencies rose 0.4%, stocks jumped 1.2% and headed for their best day in more than two weeks. China’s blue-chip CSI 300 index rose 1.4 percent, while the Shanghai Composite gained 0.8 percent.
China’s consumer and producer prices rose faster than expected in August, data showed on Friday, raising hopes for more stimulus from the government.
“Consumer inflation fell in August and remains below the PBOC’s (People’s Bank of China) target of 3%,” said Zhichun Huang, an economist at Capital Economics.
Although core inflation could rise if demand strengthens as the Covid situation improves, it could be offset by fuel and food inflation. The PBoC cut several policy rates in August and we continue to expect further rate cuts for the remainder of the period. of the year.”
Funds were set to slip 0.2% for the week, dominated by economic data and central bank activity, while stocks were down 0.4%.
EM equity fund outflows for the week since December 2021 have increased by $3.8 billion.
Among Central and Eastern European currencies, the Hungarian forint rose 1.7% on the week, while the Polish zloty and the Czech crown were set to gain 0.3% each.
Poland’s central bank could hold rates next month or opt for a small hike, Governor Adam Glapinski said after raising rates by 25 bps earlier this month, the smallest hike in the rate hike cycle so far.
“We can see further appreciation (in CEE FX) … Today’s EU meeting may bring further gas price reductions and further support for CEE, but it will not change previous arguments for weak FX and gas prices should not have a narrow impact. It will last forever,” said Eng strategist Frantisek. Taborsky said.
The EU’s proposed price hike on Russian gas is against the interests of Europe and Hungary, Hungarian Foreign Minister Peter Szijjarto said ahead of an emergency meeting of EU energy ministers to discuss ways to curb energy prices.
Elsewhere, Peru’s central bank raised interest rates by 25 bps to 6.75%.
In the year For a GRAPHIC on emerging market FX performance in 2022, see http://tmsnrt.rs/2egbfVh For a GRAPHIC on MSCI emerging index performance in 2022, see https://tmsnrt.rs/2OusNdX
New markets for TOP NEWS
See the report for the Central European market
For the Turkish market report, see
For a report on the Russian market, see (Reporting by Anisha Sircar in Bengaluru, Editing by Subhanshu Sahu)