A gauge of emerging market currencies fell to the lowest level in more than two months as rising Geopolitical tensions added to a rise in risk aversion amid a change in the outlook for US rates this week.
Msci's currency indicator for developing economies fell 0.2% in a third day of declines as investors sought safe havens such as gold and the dollar. The Hungarian forint and the Israeli shekel were the worst performers.
The global price revision triggered by US price growth data continued amid additional fears of escalating conflicts in the Middle East. Separately, Russia's escalating attacks on Ukraine were stoking concerns that kyiv's military effort was approaching a breaking point.
“Geopolitics have played a seemingly secondary role for the exchange rate for some time now, but rising tensions between Iran and Israel may lead to even higher oil prices, all to the dollar's benefit in the short term,” Francesco said. Pesole, ING strategist. Bank, wrote in a note Friday.
The MSCI emerging markets stock index fell 0.9% on the day. An outlier was the commodity-related stocks subindex, which was headed for a fourth week of gains thanks to rising energy and commodity prices.
Adding to the news weighing on sentiment, data showed China's exports slumped in March, dealing a blow to hopes that booming overseas sales will offset weak domestic demand and boost growth at home. second largest economy in the world.
Bond yields in Eastern Europe's largest emerging markets hit their highest levels so far this year on Thursday amid the global shift in rate expectations. Borrowing costs pared some of the increases on Friday, with Hungary's 10-year yield retreating from the 7% mark crossed the previous day and Poland's yields also trading lower.
