* The dominant role of the state in the economy presents risks – Moody’s on Russia
* Mexican peso rises after early count of midterm elections
* Peruvian markets are under pressure due to electoral uncertainty – JPM
By Susan Mathew
June 7 (Reuters) – Emerging market currencies hit all-time highs on Monday as the dollar came under pressure after disappointing U.S. employment data, but stocks extended their losses as the attention of investors turned to the inflation figures later in the week.
The MSCI Emerging Currency Index rose 0.2% with the Turkish lira 0.6% firmer, while the ruble climbed 0.2% in preparation for Russia’s central bank meeting on Friday, where Credit Suisse is considering a 25 basis point (bps) hike more likely than 50 bps. .
Moody’s confirmed Russia’s rating and stable outlook over the weekend, but warned that the state’s dominant role in the economy posed fiscal risks.
The dollar was flat on Monday, after falling on Friday’s US employment data which was below expectations. Asian emerging market currencies could benefit from some interim support as markets remain cautious about scaling back talks ahead of the meeting, Maybank said in a client note.
The Mexican peso strengthened 0.5%, helping the currency cut all its losses this year after the first results of Sunday’s midterm elections showed a shrunken majority for Mexico’s ruling party.
“These findings will be welcomed by financial markets, as they suggest that the ruling party is likely to have more difficulty seeking constitutional changes to undo market-friendly reforms, as well as reforms that would seek to weaken independent entities,” Credit strategists said. Swiss.
The presidential vote in Peru this weekend is too close to be overturned with the thinnest margins between right wing Keiko Fujimori and socialist Pedro Castillo.
JP Morgan said on Monday that Peruvian markets would likely remain under pressure amid electoral uncertainty.
The South African rand slipped after hitting 28-month highs at the opening. The country’s economic growth figures and the printing of the current account will be monitored this week.
Meanwhile, the MSCI Emerging Markets Equity Index fell for a fourth consecutive session as investors awaited Thursday’s U.S. consumer price data after Friday’s jobs allayed some fears that the The US economy is not picking up at a rate that could stoke inflation.
Blue-chip Chinese and Hong Kong stocks closed lower as Chinese exports in May fell short of expectations. However, imports grew at their fastest pace in 10 years.
Moody’s said Monday that new Chinese childbirth policies that allow married couples to have up to three children highlight demographic risks in emerging Asia.
Taiwan stocks and currency were battered as COVID-19 restrictions were extended for another two weeks amid rising cases.
For the CHART on the performance of emerging markets forex in 2021, see http://tmsnrt.rs/2egbfVh For the CHART on the performance of the MSCI emerging index in 2021, see https://tmsnrt.rs/2OusNdX
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For the report on the RUSSIAN market, see (Report by Susan Mathew in Bangalore; Editing by Ramakrishnan M.)