By 3 Min Read* EM stocks are gained 4% this quarter, compared to 17.3% in Q2 2020* The South African rand is down following four months of gains* International tourism is not expected to recover until 2023, according to the United Nations. 30 JUNE (Reuters) – On Wednesday, most emerging market currencies strengthened versus the dollar, putting them on course to set new monthly and quarterly highs, as traders awaited U.S. jobs data due later this week for indications on the economy’s recovery and the Federal Reserve’s position. The Turkish lira gained 0.6 percent, while the South African rand gained 0.4 percent. The rand was on track to register its first monthly loss in five months, falling 4% so far in June to rank among the worst performers among emerging market currencies. South Africa’s private-sector credit contracted 0.42 percent year on year in May, down from 1.76 percent in April, according to central bank figures released on Wednesday. The MSCI EM currency index fell for the first time since March, yet had its best second quarter since 2014. In comparison to the 2013 crisis, EM currencies are better positioned to manage prospective rate hikes and Fed tapering, according to Commerzbank analyst Thu Lan Nguyen, because numerous countries such as Brazil, Mexico, Russia, and Turkey have already begun rising local interest rates this year. “That does not, however, imply that the currencies are out of the woods. The bulk of them may be in a stronger fundamental situation… but we advise caution because the improvement is likely to be primarily attributable to lower demand as a result of the pandemic.” Belarusian bonds were unchanged after the US restricted ticket sales for air travel to and from Belarus on Tuesday, following Minsk’s forced landing of a Ryanair flight and the arrest of a dissident journalist on board. Belarus and its President Alexander Lukashenko have been heavily chastised as a result of the incident, leading European Union sanctions. The Belarusian rouble rose 0.3 percent against the dollar, putting it on track for its best quarter since the same period last year. Looking ahead for emerging nations, many of which rely on tourism for revenue, the outlook appeared dismal on Wednesday, with a UN research suggesting that international tourism arrivals are expected to remain flat this year, resulting in losses of up to $2.4 trillion. According to the research, the sector would not fully recover until 2023. An index of emerging market stocks dipped in equities, as a strong handover from Wall Street faded as investors awaited U.S. jobs data on Friday. The index was on track to post its fifth consecutive quarter of gains, with a gain of more than 4%. However, the gains were a long cry from the 17.3 percent increases seen in the same month last year, when shares rose in the expectations of resuming gains following a pandemic-related precipitous drop in March. See tmsnrt.rs/2egbfVh for a GRAPHIC of developing market FX performance in 2021. See tmsnrt.rs/2OusNdX for a GRAPHIC on MSCI emerging index performance in 2021. FOR THE LATEST NEWS IN THE EMERGING MARKETS See the market report for CENTRAL EUROPE. See the TURKISH MARKET REPORT. See the RUSSIAN market report. Susan Mathew contributed reporting from Bengaluru, and Uttaresh edited the piece.
