June 15 (Reuters) – Emerging market currencies were unchanged on Wednesday against a towering dollar, as markets wait to see the size of an interest rate hike that the U.S. Federal Reserve will deliver later in the day, while stocks attempted a cautious recovery.
Following a steep selloff earlier in the week on worries of rising inflation and slowing growth, markets are now pricing in an 87% chance of a large 75 basis point (bp) rate hike, which has buoyed the dollar but hurt riskier assets. Read full story
The MSCI’s index for emerging market currencies .MIEM00000CUS was flat but traded just above one-month low levels it had hit on Monday.
“As we hit this big day, markets now fully price in a 75 bp hike today. So that actually incorporates a small risk of 100 basis points,” said Jim Reid, managing director at Deutsche Bank.
Further adding to the wariness, the European Central Bank will hold a rare, unscheduled meeting on Wednesday to discuss the turmoil in bond markets, underscoring official concern around a blowout in borrowing costs for some euro zone nations. Read full story
Against a now stronger euro, most Central and Eastern European currencies dipped. EURPLN=, EURCZK=, EURRON=
Turkey’s lira TRY= failed to make much headway in the early hours of trading, while South Africa’s rand ZAR= eked out gains of 0.2%.
The Russian rouble RUBUTSTN=MCX dipped slightly at the start of trading, shielded from the widespread global sell-off of recent days by Moscow’s capital controls. Read full story
The MSCI’s index for emerging market stocks .MSCIEF edged 0.1% higher, mainly boosted by China shares .SSEC, .CSI300 after data showed signs of recovery in May after slumping in the prior month as industrial production rose unexpectedly. Read full story
However, consumption was still weak in China and underlined the challenge for policymakers amid the persistent drag from strict COVID curbs.