Aug 23 (Reuters) – Most emerging market currencies were subdued on Wednesday with investors cautious ahead of the U.S. Federal Reserve chair’s speech this week, while South Africa’s rand rallied after data showed inflation slowed in Africa’s largest economy.
The MSCI’s index for EM currencies .MIEM00000CUS was flat at 0900 GMT, while the stocks index .MSCIEF inched 0.1% higher.
The South African randZAR= extended gains to a fifth straight day against the dollar and was last up 0.6%, after headline consumer inflation fell to 4.7% year-on-year in July from 5.4% in June.
“While Deputy Governor Tshazibana said that it’s not ‘a solid pause’ when the South African Reserve Bank (SARB) left the policy rate unchanged at 8.25% in July, it’s reasonable to argue that finding a majority for more rate hikes could be even more difficult when the SARB meets on Sept. 21,” said Piotr Matys, senior FX analyst at In Touch Capital Markets.
South Africa and China also signed deals covering emissions technology, electricity transmission and distribution, and nuclear power on the sidelines of a summit in Johannesburg where leaders of the BRICS nations – Brazil, Russia, India, China and South Africa – are meeting.
This is part of the government’s efforts to end record power cuts, with Electricity Minister Kgosientsho Ramokgopa saying one of the deals would see Chinese companies share technology to help South Africa’s struggling state utility Eskom cut emissions from its coal-fired power plants.
The Russian roubleRUBUTSTN=MCX weakened against the dollar, ahead of three OFZ treasury bond auctions, while oil major Lukoil’s sharesLKOH.MM shed 1% after Tuesday’s sharp gains on a report that it could buy back a chunk of shares at a 50% discount.
The BRICS summit could impact Russian assets, especially as member states look to boost the use of their local currencies.
Also on top of the agenda at this year’s summit is a potential expansion of the bloc, with some hoping to forge it into a counterweight to Western dominance of global institutions.
The New Development Bank of the BRICS group of nations is registering an Indian rupee bond programme worth $2.5 billion over 5 years, its CFO Leslie Maasdorp said during a panel discussion
China’s blue-chip CSI 300 Index .CSI300 and the Shanghai Composite Index .SSEC fell more than 1% each as investors stayed cautious amid a deepening crisis in the country’s real estate sector and as a raft of share buybacks did little to boost confidence.
Chinese President Xi Jinping said on Tuesday at the BRICS summit that China’s economy was resilient and that the fundamentals for its long-term growth remained unchanged.
Also in focus, Argentine Economy Minister Sergio Massa said he expects the International Monetary Fund (IMF) board to approve the latest reviews of its huge loan program on Wednesday, unlocking $7.5 billion that the embattled country desperately needs.
Investors eyed a rate decision by Zambia’s central bank later in the day.
(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Devika Syamnath)