MOSCOW: Emerging-market (EM) currencies rounded off a winning month, defying the prospect of further rate hikes by the Federal Reserve, as more developing-nation central banks deployed tighter monetary policies to backstop local markets.
Highlights for the week ended Sept 28:
> Trade tension between China and the US escalated as some US$200bil of Chinese products became subject to US tariffs on Sept 24, on top of US$50bil of existing levies. Meanwhile, US$60bil of goods from the US became subject to higher Chinese tariffs, adding to the US$50bil already levied.
> Federal Reserve officials raised interest rates and cemented expectations for another hike this year as they reaffirmed that a strong US economy will probably warrant further gradual increases well into 2019.
> Turkey’s lira led emerging-market currency gains last week as a refinanced loan by the nation’s second-largest listed lender cooled concern of a debt crisis.
> Argentine’s peso was the worst performer for last week and the quarter; central bank President Luis Caputo resigned last Tuesday and was replaced by Guido Sandleris, an academic who’d been serving as deputy economy minister; the nation won a promise of extra cash and faster payments from the International Monetary Fund, which expanded a record bailout to about US$57bil over three years.
> China-listed stocks will be added to FTSE Russell’s global indexes; the index compiler will also review Argentina and Vietnam for possible reclassification as secondary emerging markets.
> Poland’s stocks debuted in the FTSE Russell developed-nation benchmark last Monday.
> Donald Trump said there’s “good chance” Canada joins trade pact with US and Mexico, even as he claimed to reject meetings with Justin Trudeau over Canadian tariffs.
> The US Congress is said to be unlikely to pass any new sanctions on Russia, including proposals that would affect its sovereign debt and energy projects, until after November elections.
> The Reserve Bank of India allowed banks to dip further into statutory liquidity reserves to help them meet coverage ratio needs; the government raised import taxes on US$12bil of goods as it seeks to narrow the current-account deficit from a five-year high.
> Indonesia’s central bank raised its benchmark interest rate for the fifth time since May, while the Philippine central bank hiked rates to the highest since 2011.
> The Chinese yuan weakened; the nation refuted President Donald Trump’s accusations that Beijing is trying to interfere with congressional elections, a move that further raises tensions as the world’s biggest economies fight a trade war. — Bloomberg