LONDON Feb 21 Nigeria's naira currency weakened
on Tuesday against the dollar in the non-deliverable forwards
market as expectations of a devaluation grew, while the rand
slipped too before a key budget speech by the finance minister.
Emerging equities held steady near 19-month highs,
while currencies such as the rouble and the Turkish lira were
also more or less unchanged against the firmer dollar
. Earlier in the day, the Philippine peso plumbed a
The spotlight was on Africa, with most attention focused on
the naira after Nigeria's central bank effectively devalued the
currency for private individuals while holding the official
exchange rate at 305 per dollar.
People can now access hard currency at a rate of 366 per
dollar to pay for foreign school fees and travel, though the
black market rate is around 520.
Three-month naira-dollar NDFs weakened almost 6 percent
while one-month NDFs traded 4 percent lower - their weakest
levels since November, according to Reuters data
. The naira also slipped 6 percent in the six-month
NDF market, showing a rate of 395 per dollar.
Nigeria has tried to make the exchange rate more flexible
before, leading to a 30 percent devaluation last year, only to
reimpose a quasi-currency peg.
"The story of a possible devaluation has come back as the
latest moves seem to show a small entry towards to a weaker
exchange rate," said William Jackson at Capital Economics.
"My worry is that they are not moving to a fully floating
rate but to a more complex system of parallel rates, which will
add to the confusion but won't help exporters."
Nigerian five-year credit default swaps traded at a one-year
high of 618 basis points, according to Markit.
The rand, which has gained 5 percent against the
dollar this year on the back of firmer commodity prices, slipped
0.7 percent on jitters before Finance Minister Pravin Gordhan's
Gordhan, respected by markets, has pointed to "green shoots"
of growth in the economy but warned of a "difficult political
year". Investors still fear that President Jacob Zuma wants to
replace Gordhan in mooted cabinet changes.
"The markets will be looking to see what fiscal tightening
will be undertaken to reduce the budget deficit, stabilise debt
ratios and maintain the investment grade rating," Jackson said.
"What people also want to see is a realistic growth forecast
as the consensus is increasingly bearish."
The South African central bank's leading business cycle
indicator rose by 0.7 percent month-on-month in December as the
price of dollar-based commodity exports rose but this failed to
lift stocks, which slipped 0.3 percent.
Bank stocks fell 1.3 percent as South Africa's
competition watchdog warned it would seek maximum penalties in a
probe into alleged rand rigging.
Some other emerging market currencies were able to make
gains, with the recently devalued Egyptian pound trading just
off three-month highs.
The Kazakh tenge firmed 0.7 percent to its strongest
since December 2015, after gaining over 5 percent so far this
year. The tenge has been buoyed by stronger oil prices
-- so much so that the central bank cut interest rates by 100
basis points on Monday.
Eastern European bourses enjoyed strong gains, with Warsaw
up 1.4 percent and Bucharest up 0.8 percent to
its highest level since June 2008.
The lower house of Romania's parliament will vote today on
withdrawing a decree on graft prosecution rules which caused
huge street protests three weeks ago. The government has already
agreed to scrap the degree.
The gains carry on from strong performance in Asia earlier
in the day when Chinese mainland stocks closed
near three-month highs, helped by reports that pension funds
will begin pumping money into the market.
South Korean stocks also closed near 20-month highs.
For GRAPHIC on emerging market FX performance 2017, see tmsnrt.rs/2e7eoml
For GRAPHIC on MSCI emerging index performance 2017, see tmsnrt.rs/2dZbdP5
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see)
Emerging Markets Prices from Reuters
Equities Latest Net Chg % Chg % Chg
Emrg Mkt Indx 943.76 +0.18 +0.02 +9.45
Czech Rep 974.05 +0.73 +0.07 +5.69
Poland 2221.69 +28.90 +1.32 +14.05
Hungary 34091.25 +117.66 +0.35 +6.53
Romania 7861.35 +65.21 +0.84 +10.96
Greece 656.10 +10.15 +1.57 +1.94
Russia 1158.76 +8.37 +0.73 +0.56
South Africa 45370.25 -135.95 -0.30 +3.34
Turkey 88933.73 +346.07 +0.39 +13.82
China 3253.25 +13.29 +0.41 +4.82
India 28722.31 +60.73 +0.21 +7.87
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 27.02 27.01 -0.04 -0.04
Poland 4.31 4.32 +0.07 +2.07
Hungary 307.45 307.73 +0.09 +0.45
Romania 4.51 4.52 +0.11 +0.45
Serbia 123.66 123.79 +0.11 -0.25
Russia 57.99 57.91 -0.13 +5.64
Kazakhstan 316.69 318.89 +0.69 +5.36
Ukraine 27.03 26.98 -0.18 -0.11
South Africa 13.11 13.04 -0.58 +4.72
Kenya 103.45 103.45 +0.00 -1.04
Israel 3.71 3.71 -0.01 +3.80
Turkey 3.62 3.62 +0.19 -2.48
China 6.88 6.88 -0.07 +0.90
India 66.98 66.90 -0.13 +1.44
Brazil 3.09 3.09 -0.00 +5.42
Mexico 20.44 20.36 -0.37 +1.36
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 338 -1 .05 7 58.17 1
(Additional reporting by Sujata Rao; Editing by Catherine