LONDON: 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 highs.
"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 US 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."
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