ANL 32.21 Increased By ▲ 0.51 (1.61%)
ASC 18.65 Increased By ▲ 1.20 (6.88%)
ASL 26.45 Decreased By ▼ -0.15 (-0.56%)
AVN 91.35 Increased By ▲ 0.85 (0.94%)
BOP 8.21 Increased By ▲ 0.03 (0.37%)
BYCO 11.84 Increased By ▲ 0.49 (4.32%)
DGKC 126.00 Decreased By ▼ -2.50 (-1.95%)
EPCL 48.20 Increased By ▲ 0.05 (0.1%)
FCCL 23.96 Increased By ▲ 0.06 (0.25%)
FFBL 27.90 Decreased By ▼ -0.09 (-0.32%)
FFL 17.79 Decreased By ▼ -0.15 (-0.84%)
HASCOL 11.45 Increased By ▲ 0.25 (2.23%)
HUBC 78.30 Decreased By ▼ -0.70 (-0.89%)
HUMNL 8.64 Decreased By ▼ -0.08 (-0.92%)
JSCL 24.65 Increased By ▲ 0.35 (1.44%)
KAPCO 44.75 Increased By ▲ 0.06 (0.13%)
KEL 4.19 Decreased By ▼ -0.03 (-0.71%)
LOTCHEM 16.31 Decreased By ▼ -0.29 (-1.75%)
MLCF 46.70 Decreased By ▼ -0.35 (-0.74%)
PAEL 36.20 Increased By ▲ 0.32 (0.89%)
PIBTL 11.04 Decreased By ▼ -0.11 (-0.99%)
POWER 10.08 Decreased By ▼ -0.02 (-0.2%)
PPL 90.20 Decreased By ▼ -0.50 (-0.55%)
PRL 26.25 Increased By ▲ 0.31 (1.2%)
PTC 14.00 Increased By ▲ 0.99 (7.61%)
SILK 1.58 Increased By ▲ 0.02 (1.28%)
SNGP 48.20 Increased By ▲ 0.25 (0.52%)
TRG 168.50 Decreased By ▼ -3.30 (-1.92%)
UNITY 49.39 Increased By ▲ 0.14 (0.28%)
WTL 4.26 Increased By ▲ 0.01 (0.24%)
BR100 5,282 Increased By ▲ 24.37 (0.46%)
BR30 27,601 Increased By ▲ 45.56 (0.17%)
KSE100 48,305 Increased By ▲ 53.23 (0.11%)
KSE30 19,479 Decreased By ▼ -58.87 (-0.3%)
Markets

EM FX turn positive; Mexican peso recovers from central bank reshuffle falls

  • MSCI's index of EM currencies rose 0.1% with Brazil's real rallying strongly as attention turned to next week's central bank meeting.
  • Mexico's peso erased early losses after a reshuffle of the central bank governor and finance minister on Wednesday, to rise 0.2%.
Updated 10 Jun 2021

Emerging market currencies turned positive for the day and stocks added to gains as markets brushed past higher-than-expected US inflation figures, with a central bank leadership change in Mexico denting the peso.

US inflation for May rose more than expected, but not enough to for the US Federal Reserve's to change its loose monetary policy, analysts said. The European Central Bank kept stimulus taps wide open at its meeting.

"It is eye-popping but it's important to consider where we are versus a year ago," said Scott Brown, chief economist at Raymond James in Florida. "I don't think there is any reason for the Fed to panic."

MSCI's index of EM currencies rose 0.1% with Brazil's real rallying strongly as attention turned to next week's central bank meeting. Analysts increasingly see a rate hike to control inflation, which would make the currency an attractive high yielder for carry trade.

"Economic optimism and the hope that the Brazilian central bank would more than partially normalise the key interest rate have again significantly boosted the BRL appreciation last month," said Commerzbank's EM FX analysts.

"However, we remain cautious in view of country-specific risks," they said, citing the possibility of President Jair Bolsonao taking non-conventional decisions in the run-up to presidential elections next year.

Stocks in Sao Pailo were lifted by a 11% jump in planemaker Embraer after its subsidiary, Eve Urban Air Mobility Solutions, entered merger talks with Zanite Acquisition Corp for a potential $2 billion deal.

Mexico's peso erased early losses after a reshuffle of the central bank governor and finance minister on Wednesday, to rise 0.2%.

Mexican Finance Minister Arturo Herrera was tapped on Wednesday by President Andres Manuel Lopez Obrador to lead the central bank, while economist Rogelio Ramirez de la O, a close ally, was appointed finance minister.

"Banxico's Board shall become more dovish," strategists at Citi Research said, adding that they do not expect that many changes on the fiscal front.

The moves come after the ruling party lost some of its majority in the Lower House of the Congress, making it harder to pass proposed reforms that could alter market-friendly policies.

Peru's sol made small moves as investors looked for more news on the progress of presidential vote counting. Socialist Pedro Catillo maintained a slight lead, although rival right-wing conservative Keiko Fujimori contested several ballots.

Falling copper prices weighed on top exporter Chile's peso which extended losses to day three. Chile's economy surged 15.2% in May and 14.7% in the second quarter, a central bank poll showed.