MSCI's emerging market currency index hit a fresh record high on Wednesday as the dollar wallowed near its weakest point since early January amid Fed's insistence to continue stimulus despite inflationary pressures.
“The continual commentary from (US Federal Reserve) officials reinforcing the current Fed accommodative policy is pushing US yields lower, keeping the dollar on the back foot, and helping risk appetite,” Andre Cilliers, currency strategist at TreasuryONE told Reuters.
The index that measures the total return of 25 emerging market currencies relative to the US dollar, scaled 1746.51 to rise above the peaks it reached earlier this month.
The index is majorly dominated by Asian currencies, like the Chinese Yuan, which rose to a nearly three-year high, after its central bank interfered. However, the Belarusian rouble continued to lag as it faces tensions from the west.
Turkish Lira too staged a modest recovery after the worst Tuesday in two weeks. Turkey replaced yet another central banker on Tuesday, the latest in a series of oustings.
South Africa's Rand held near highs that were last seen over two years ago. Russia's rouble traded near its mid-March highs. As the tensions between Russia and the US rise (amid sharp disputes over Ukraine, human rights, cyber attacks, and election interference), the leaders of both nations will meet on Geneva on June 16.
The Indian currency market was closed on Wednesday on account of Buddha Purnima.
On the other hand, MSCI’s index of emerging market stocks extended gains for a second straight session on Wednesday. The index climbed to a 16-day high on the back of strong tech stocks.
With inputs from Reuters
First Published: May 26, 2021 2:49 PM IST
