EMERGING MARKETS – Hungarian forint appreciates ahead of rate hike; stocks stop sliding

By Bansari Mayur Kamdar

September 27 (Reuters)Emerging market currencies were subdued on Tuesday after four days of steep losses as the US dollar retreated from its 20-year high, while the Hungarian forint rose ahead of its rate decision.

The Hungarian Forint EURHUF= climbed 0.2% against the euro ahead of a central bank decision at 1200 GMT when the National Bank of Hungary is expected to raise its key rate by 100 basis points to 12.75%, according to a Reuters poll.

Economists expect further hikes by the end of the year despite the bank signaling a possible halt to its increases.

The forint has lost more than 9% this year and hit a historic low of 416.90 to the euro in July as Budapest is locked in a dispute with the EU executive over rule of law issues that blocks the disbursement of the necessary funds.

“They could also opt for a rate hike of slightly less than 75 basis points due to the growing downside risk to the Hungarian economy and looking at what other central banks in the region have been doing,” said Piotr Matys, senior analyst at In Touch Capital Markets. .

Rate settlers in Budapest are kicking off a series of policy meetings in central Europe where policymakers seek to end a cycle of interest rate hikes that has been underway since last year even as inflationary pressures persist and major The world’s central banks continue to seek higher rates.

The Central Bank of Nigeria and the Central Bank of Morocco are also holding monetary policy meetings later in the day.

Emerging currencies .MIEM00000CUS which came under pressure from a strong dollar remained stable as the US dollar index =USDslipped 0.1% to 113.72, falling from a two-decade high of 114.58 on Monday.


The MSCI Emerging Equity Index .MSCIEF gained 0.3%, ending a three-day losing streak.

“It’s probably fair to say this is a short-term correction,” Matys said.

“The driving factors that set the tone for the markets over the past few months are still in place, the Fed continues to raise interest rates and the war in Ukraine is likely to escalate.”

Among other emerging market currencies, the South African rand ZAR= strengthened by 0.6% in early trading.

In Russia, the ruble RUBUTSTN=MCX was 2% stronger against the dollar at 58.1, while Russia’s ruble-based MOEX index .IMOEX recovered 1.3%, halting the rot after plunging to its lowest point since Feb. 24 in the previous session. UK/RUB

Russian stocks fell last week on fears of new sanctions against Moscow after President Vladimir Putin’s partial military mobilization order, while the currency remained strong, supported by capital controls and an end-of-month fiscal period .

A weaker dollar early in the day also boosted appetite for risk-sensitive Asian currencies, while Philippine equities .PSI fell to its lowest level since October 2020 due to growing economic headwinds.

The World Bank said economic growth in East Asia and the Pacific will weaken sharply in 2022 due to China’s slowdown, but the pace of expansion will pick up next year.

For the 2022 Emerging Markets FX GRAPH, see http://tmsnrt.rs/2egbfVh

For the GRAPH on the performance of the MSCI emerging index in 2022, see https://tmsnrt.rs/2OusNdX

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For the CENTRAL EUROPE market report, see EEC/

For the TURKISH market report, see .IS

For the RUSSIAN market report, see UK/RUB

(Reporting by Bansari Mayur Kamdar in Bengaluru, editing by Ed Osmond)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Laura T. Thrasher