Emerging-Market Currencies Rise Amid Trump’s Remarks on Dollar

  • President-elect said the U.S. currency is already ‘too strong’
  • Standard Bank sees international investors returning to rand

Emerging-market currencies and stocks advanced as the U.S. dollar slumped after President-elect Donald Trump said the currency is “too strong.”

A gauge of developing-nation currencies reversed Monday’s slide led by the South African rand, the Polish zloty and Hungary’s forint. Brazil’s real got an additional boost as the central bank acted to support the currency.

Trump said in an interview with the Wall Street Journal that the U.S. dollar was already "too strong" in part because China holds down its currency, adding the U.S. companies can’t compete with the Chinese because of the current level of the greenback. Dollar selling accelerated as algorithmic traders reacted to Trump’s comments and the Bloomberg Spot Dollar Index fell to the lowest level in a month.

The key question is whether Trump is referring to the broad dollar or more specifically to the greenback versus the yuan, said Gareth Berry, a currency and rates strategist at Macquarie Bank in Singapore. If his comments referred to the broad dollar, then this could be a “game-changer."

Currencies

  • MSCI emerging currency index gained 0.8 percent to the highest level in more than two months.
  • South Africa’s rand climbed 1.5 percent, erasing its steepest drop in a week on Monday, as the World Bank said it sees a modest recovery for the country’s economy in 2017 and 2018.
  • Brazil’s real advanced 0.9 percent as the central bank resumed its offerings of swap contracts intended to support the currency. Analysts said this shows the BCB intention to blunt any possible volatility spurred by changes in U.S. economic policy after Trump inauguration.
  • Bloomberg Spot Dollar Index fell 1.3 percent.

Stocks

  • MSCI’s gauge of stocks advanced for the first time in three days, increasing 1.0 percent.
  • Brazil’s Ibovespa index rose 0.8 percent to the highest in more than two months.
  • Russia’s RTS index rose 0.5 percent.
  • Egypt’s EGX 30 Index rose 1.3 percent to the highest on record.

Top Stories

  • Brazil to Revise Growth Figures After IMF Slashed Outlook
  • Brazil Rate Cuts Seen Stoking World-Beating Stock Rally: Chart
  • Faith in Emerging Stocks Grows as Currencies Lose Favor: Chart
  • May Pledges Vote on Brexit Taking U.K. Out of Single Market
  • China Said to Intervene in Stock Market as Xi Attends Davos
  • Mozambique Won’t Blink First as Battle With Bondholders Heats Up
  • BlackRock Emerging Stock ETF Gets Record Flows Amid Cost: Chart

— With assistance by Netty Idayu Ismail, Vinicius Andrade, and Ben Bartenstein

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE