Expectations major central banks will keep monetary policy loose pushed emerging stocks to their highest since February 2013 on Tuesday, while the Serbian dinar neared a two-year low after the finance minister quit.
Russian assets also fell on signs of renewed tensions in Ukraine.
European Central Bank president Mario Draghi said late on Monday that a stronger euro exchange rate was a risk to the sustainability of the euro zone recovery.
Investors took this as a sign of continued low interest rates in the euro zone, which have helped fuel demand for high-yielding emerging market assets.
“The general picture remains that the bulk of major central banks are conducting ultra-expansionary policies, therefore we have very low volatility in emerging market currencies and basically one has to look at local factors to see what could drive markets,” said Thu Lan Nguyen, emerging FX strategist at Commerzbank in Frankfurt.
The MSCI emerging equities index rose 0.26 percent to its highest since Feb 2013.
Turkish stocks hit five-week highs. Data for the first half showed Turkey was comfortably on track to meet its budget deficit targets this year, Finance Minister Mehmet Simsek said on Tuesday.
Emerging European currencies were mostly steady.
The Serbian dinar, which the country’s central bank keeps in a managed float, hit its lowest since September 2012, after the finance minister resigned at the weekend over reform disagreements.
Russian assets fell for a second straight session, with stocks down more than half a percent at two-week lows and the rouble at one-week lows.
Ukraine accused Russian army officers on Monday of fighting alongside separatists in the east of the country and said Moscow was once more building up its troops on the joint border. The United States accused Russia of providing armaments to rebels.
Bulgarian stocks hit two-week lows as the country said on Monday it would seek European supervision for its banks.
Bulgaria’s central bank said last week it would let Corporate Commercial Bank collapse but make sure that customers did not lose out in the wake of Bulgaria’s worst financial scandal since a domestic banking crisis in 1996-1997.
The shekel hit its highest in three years and Israel’s debt insurance costs were steady at 86 basis points in the five-year credit default swap market, according to Markit.
Israel approved on Tuesday an Egyptian-proposed deal that would halt the week-old Gaza shelling war but the Palestinian territory’s dominant Hamas Islamists responded with suspicion, saying they had not been consulted by Cairo.
Source Business Recorder
