Mensajepor Mr_Baca » Mar Sep 27, 2011 6:26 pm
DJ Emerging-Market Currencies, Debt Strengthen On Euro-Zone Hopes
27-Sep-2011
--Emerging-market currencies, debt strengthen
--Increased optimism on euro-zone, Greece debt crisis drive emerging-market performance
--South African rand leads gainers
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Emerging-market currencies and debt saw renewed strength Tuesday, lifted by optimism that euro-zone policymakers will work to contain the sovereign debt crisis.
Emerging-market currencies that had been hit hardest in recent trading were among top gainers, while debt strengthened across the board. The South African rand--often a barometer for risk appetite--rose more than 2% on the day against the dollar.
"It's a bit of a correction from the big selloff last week," said Brown Brothers Harriman strategist Win Thin. The improved euro-zone outlook drove emerging markets' gains as well, he said.
Greece's parliament Tuesday approved a new property tax law in a closely watched vote, taking a key step in the country's efforts to secure further aid from its international creditors and avoid default. Meanwhile, Slovenia's Parliament approved legislation boosting the size of the euro-zone's rescue fund, putting to rest fears that political instability in the tiny country might lead to delays before the European Financial Stability Facility becomes operational.
In turn, emerging-market assets took a cue from other markets, as U.S. stocks rose and commodities picked up gains. The risk premium investors demand to hold what they perceive as riskier emerging-market debt decreased. This spread as reflected on the J.P. Morgan Emerging Markets Bond Index Global, or Embig, was 25 basis points tighter to 442 basis points above Treasurys. In price terms, the index jumped 0.8%.
Turkey's debt outperformed, with its spread shedding 39 basis points to 364 basis points over Treasurys, and its index climbed 1.6%. Though the Turkish lira slipped against the euro, it did advanced modestly against the dollar. The U.S. currency fell 0.4% to TRY1.8449, according to CQG.
Elsewhere in emerging Europe, the Hungarian forint gained against its developed-market counterparts. The euro fell more than 1% against the forint to HUF286.31. The forint had suffered in recent weeks on concern about the country's exposure to the euro-zone.
The Mexican peso led gainers among Latin American currencies. The dollar slid to MXN13.3309 against the Mexican peso from MXN13.5403 late Monday, according to CQG. The U.S. currency slid about 1.3% against the Brazilian real to BRL1.8020.
It was the South African rand, however, that stood out among developing-market currencies. The rand, which often moves in line with wider market trends, strengthened about 2.5% against the dollar, which changed hands at ZAR7.8552 late Tuesday.