Emerging Currencies Rise to Five-Week High on Oil, Fed Outlook

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Shrinking Currency Reserves Threaten Emerging Asia

Emerging-market currencies rose to a five-week high and stocks from Russia to Brazil gained as oil jumped and speculation mounted that the Federal Reserve will delay raising U.S. interest rates, buoying demand for riskier assets.

The ruble climbed for a fourth day against the dollar, extending the world’s best performance this year, as Brent crude rebounded 5.8 percent to $58.12 a barrel. The dollar-denominated RTS Index of Russian stocks jumped to the highest since late November. Saudi Basic Industries Corp. ended a two-day drop in Riyadh. Brazil’s Ibovespa rose for a third day. Sun Pharmaceutical Industries Ltd. surged to a record in Mumbai.

An index tracking 20 developing-nation currencies added 0.3 percent to the highest level since March 2. The measure jumped 1.2 percent last week as a U.S. payroll report became the latest economic statistic to trail estimates, helping boost appetite for riskier assets. Federal Reserve Bank of New York President William C. Dudley said Monday that the timing of the first rate increase “remains uncertain” and the pace will probably be “shallow” when the Fed starts to tighten.

“Weak U.S. macroeconomic data gives investors hope that the Fed will hike rates later rather than sooner,” Vladimir Vedeneev, the chief investment officer at Raiffeisen Capital Asset Management in Moscow, said by e-mail. “We’re seeing a reversal of the strong capital outflows from emerging markets into U.S. assets. Oil seems to have found a fragile balance, which is positive.”

Investors added $561.5 million to U.S. exchange-traded funds that buy emerging-market stocks and bonds for the third straight week, led by accelerating flows into China and Hong Kong, according to data compiled by Bloomberg. In the first quarter, the funds lost $1.6 billion.

Brent Recovers

The MSCI Emerging Markets Index climbed 1.2 percent to 1,005.86 on Monday, its sixth day of increases. Markets in China, Hong Kong, Taiwan, Thailand and Poland were among exchanges closed for holidays.

Brent, the benchmark used to price Russia’s main export blend, has moved between a low of $52.50 a barrel and a high of $63 a barrel in the past two months after sliding to a six-year low of $45.19 in January. It gained on Monday as Saudi Arabia raised prices for shipments to Asia.

The advance helped boost assets in oil-exporting countries, with the ruble appreciating 2 percent to 55.488 per dollar and the ringgit climbing to a one-month high of 3.6315. Malaysia is Asia’s only major oil exporter.

The Ibovespa gained 1.2 percent. The RTS Index jumped 4.4 percent. Sabic climbed 0.9 percent in Riyadh. Stock indexes in Dubai and India advanced at least 0.9 percent.

More Expensive

All 10 industry groups in the MSCI Emerging Markets Index increased, led by health-care and technology companies. Sun Pharmaceutical surged 8.2 percent. A 5.2 percent rally in the developing-country gauge this year has driven its 12-month projected price-to-earnings ratio to 12.1, a five-year high. That’s a 28 percent discount to the MSCI World Index, which has gained 3.2 percent in 2015.

Samsung Electronics Co. climbed the most since March 11. The company’s first-quarter operating profit probably rose more than 5 percent from the fourth quarter, Korea Economic Daily reported. The company is due to release earnings on Tuesday.

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