LONDON: Turkey's lira firmed on Tuesday after above-forecast inflation appeared to rule out an emergency interest rate cut, while Russian and Gulf assets drew support from rallying oil prices.
The lira rose 0.45 percent against the dollar, after wilting to record lows in recent days on fears the central bank was coming under rising pressure from President Tayyip Erdogan to cut interest rates.
Expectations of an extraordinary central bank meeting on Wednesday were quashed by January data showing inflation falling less than expected.
Turkish stocks headed 0.86 percent lower and bond prices eased after the data but pressure from the government for a rate cut continued unabated on Tuesday, raising concerns among investors.
"This is a terrible signal for confidence in credibility at a delicate time," said Ilan Solot, a strategist at Brown Brothers Harriman in London. "It takes away some of the potential benefits of a rate cut as people are afraid the central bank will have pressure to cut more."
Russian assets got a lift from oil prices rising for the third straight session to top $56 per barrel. The rouble which had tanked after last week's surprise 200 basis point rate cut, gained 2.69 percent against the greenback whilst dollar-denominated stocks rose 4.6 percent and their rouble peers added 1.4 percent.
But the likelihood of more Western sanctions over Moscow's role in the Ukraine crisis will weigh on markets, Solot predicted, adding: "My guess is Russia is more of a short-covering move than genuine conviction."
Stock markets across the Gulf also took heart from crude prices, rising 0.6 to 2.5 percent, while the MSCI emerging stocks index rose 0.61 percent.
In Egypt, the stock index traded 1.19 percent higher, shrugging off security concerns after a homemade explosive device went off in central Cairo and two more bombs were found at the capital's airport.
Most other European emerging currencies strengthened, following their Asian peers in gaining ground on rising risk appetite, though gains were capped somewhat after the Australian central bank cut rates.
In Poland the zloty strengthened 0.2 percent against the euro before an interest rate decision due on Wednesday.
According to a Reuters poll, the central bank is likely to leave interest rates unchanged but will probably deliver one more rate cut in March to counter a prolonged decline in consumer prices.
Greek stocks jumped 8 percent after Athens dropped calls for a debt write-off and proposed swapping debt for growth-linked bonds
Comments
Comments are closed for this article.