Emerging market currencies and stocks gain ground
November 20, 2015, 5:27 pm

All Latam currencies were up on expectation that any Federal Reserve rate hike would be slow and gradual [Xinhua]

The MSCI Emerging Markets Index (which measures stock market activity) on Friday surged upward registering a 2.7 per cent growth over the week.

Brazil’s real currency gained 1.7 per cent, slowly reversing nearly 50 per cent devaluation year on year.

At press time, Brazil’s stock exchange Bovespa was up nearly 1 per cent.

Mexican and Colombian currencies also edged upward at 0.8 per cent each. Chile’s peso also rose 0.45 as did Peru’s sol by 0.18 per cent.

Russia’s rouble fell 0.7 per cent on lower oil prices after a week of strong stock gains.

However, the rouble was up 3 per cent week on week.

South Africa’s rand rose 1 per cent on Thursday and again 0.4 per cent on Friday.

The strengthening of these currencies comes as JP Morgan analysts predict that emerging markets will see better economic growth in the coming quarters.

They said that Brazil’s current recession will ease out next year and that Russia’s sanctions-hit economy is showing signs of stabilization.

However, quick interest rate hikes by the Fed could pull the rug from under emerging markets. The slower the pace of raising interest rates, the better for the commodities trade, which emerging markets heavily depend on.

Meanwhile, US stocks rose ending a week that had started down as a result of the Paris attacks last weekend.

The Dow Jones at midday trading was up nearly 0.6 per cent; the S&P500 was up nearly 0.5 per cent and the Nasdaq was up 0.53 per cent.

US stocks were boosted by European Central Bank’s chief Mario Draghi who gave the strongest indication yet on Friday that the eurozone stimulus program may increase next month.

The euro fell against the dollar on Draghi’s remarks and was trading just shy of 1.07 – it’s worst level since March 2015.

The BRICS post with inputs from Agencies