EMERGING MARKETS-Naira tumbles 23 pct; assets gain as Brexit fears ease

lunes 20 de junio de 2016 06:26 GYT

By Karin Strohecker
    LONDON, June 20 (Reuters) - Nigeria's naira lost around
quarter of its value on Monday after the central bank dropped
its dollar peg, though most other emerging markets assets rose
as fears eased over Britain leaving the European Union.
    Indian assets sold off after respected central bank chief
Raghuram Rajan said over the weekend that he would step down
when his term expires in September. 
    MSCI's emerging market stock index rose 1.3
percent to a one-week high, and its eastern European benchmark
 jumped more than 2 percent after opinion polls
showed the "Remain" camp recovering some momentum ahead of
Britain's referendum due on Thursday. 
    "The (opinion) polls have turned a bit and Brexit odds have
declined which is helping risk sentiment to some degree,"
Unicredit emerging FX strategist Kiran Kowshik said.
    Asian bourses  also rose, apart from Chinese
mainland stocks , which ended flat after a new
crackdown on speculative trading added to devaluation concerns.
    Higher commodity and oil prices together
with dollar weakness also provided support, allowing
currencies including South Africa's rand, Turkey's lira
 and Russia's rouble to firm to about one-week
    "Another thing in the background that's helping is the
weaker dollar as the view in the G10 space is that the dollar is
overvalued, the U.S. Federal Reserve seems quite troubled by the
uncertain global outlook and that's helping emerging markets,"
Kowshik said.
    Easing Brexit worries lifted assets across eastern Europe -
the region with the most direct economic links with Britain and
the eurozone. Poland's zloty and Hungary's forint
 traded at their strongest for a week while the Prague
, Budapest and Warsaw bourses rose more
than 1 percent.
    In Nigeria, the naira tumbled to as low as 255 per
dollar after the country abandoned its 16-month-old peg that had
fixed the currency at about 197 to the dollar, bringing foreign
investment and the FX market to a stand-still. 
    Nigerian stocks inched to new three-week highs after rising
almost 8 percent last week.
    Analysts are uncertain how much more the naira might be
allowed to fall.
    "The (central bank).. remains in the dilemma to either
intervene in currency markets, that is, depleting reserves which
have already dropped to $26 billion or to hike its benchmark
rates," Mitsubishi UFG said in a note.
    The Indian rupee fell to a near one-month low and
bond yields rose to their highest since mid-March after Rajan's
announcement. Investors said that his replacement at the central
bank would need to be somebody who can defend its autonomy at a
critical juncture.  
    "(Rajan's) departure comes well before structurally lower
inflation as part of the new inflation targeting framework 
became entrenched," UBS strategist Manik Narain said.
    "These sorts of changes take years if not decades to
achieve, and it is sad to see that this process will now become
more uncertain."
    Emerging Markets Prices from Reuters            
 Equities                  Latest    Net Chg  % Chg  % Chg      
                                                     on year    
 Morgan Stanley               
 Emrg Mkt Indx    817.02   +10.80   +1.34   +2.88     
 Czech Rep            841.01    +9.80   +1.18  -12.06     
 Poland           1778.98   +24.53   +1.40   -4.31     
 Hungary           26595.52  +353.02   +1.35  +11.18     
 Romania           6487.63   +21.35   +0.33   -7.38     
 Greece              586.55   +30.07   +5.40   -7.10     
 Russia             932.62   +22.34   +2.45  +23.19     
 South Africa   46742.81  +605.92   +1.31   +2.06     
 Turkey          77097.42 +1666.89   +2.21   +7.49     
 China             2888.59    +3.49   +0.12  -18.38     
 India           26862.97  +237.06   +0.89   +2.85     
 Currencies              Latest    Prev    Local    Local       
                                   close   currency currency    
                                           % change % change    
                                                    in 2016     
 Czech Rep      27.05     27.03   -0.09    -0.20      
 Poland          4.40      4.41   +0.30    -3.19      
 Hungary       312.89    313.77   +0.28    +0.56      
 Romania         4.53      4.54   +0.13    -0.24      
 Serbia        123.21    123.11   -0.08    -1.41      
 Russia            64.16     64.75   +0.92   +13.70      
 Kazakhstan       334.73    338.82   +1.22    +1.72      
 Ukraine           24.88     24.88   -0.00    -3.73      
 South Africa      14.90     15.11   +1.41    +3.75      
 Kenya            101.20    101.00   -0.20    +0.99      
 Israel             3.85      3.87   +0.40    +0.95      
 Turkey             2.90      2.92   +0.77    +0.51      
 China              6.58      6.58   +0.09    -1.32      
 India             67.39     67.06   -0.48    -1.76      
 Brazil             3.41      3.42   +0.05   +15.97      
 Mexico            18.64     18.84   +1.06    -7.89      
 Debt                 Index   Strip Spd  Chg   %Rtn   Index     
 Sov'gn Debt  EMBIG   423        -6    .06  7 26.60 1   
    For GRAPHIC on emerging market FX performance 2016, see link.reuters.com/jus35t
    For GRAPHIC on MSCI emerging index performance 2016, see link.reuters.com/weh36s
    For GRAPHIC on MSCI emerging Europe performance 2016, see link.reuters.com/jun28s
    For GRAPHIC on MSCI frontier index performance 2016, see link.reuters.com/zyh97s
    For CENTRAL EUROPE market report, see 
    For TURKISH market report, see 
    For RUSSIAN market report, see )

 (Additional reporting by Sujata Rao; Editing by Louise Ireland)