May 5, 2020 / 8:10 AM / 21 days ago

EMERGING MARKETS-Easing lockdowns, oil rally lift shares; Turkish lira weakens

* Some U.S states, Italy, Spain, India, Turkey ease lockdowns

* Ringgit flat after 50 bps interest rate cut

* Turkish lira about 2.3% away from 2018 crisis lows

* Higher oil prices lift Russia’s rouble

By Susan Mathew

May 5 (Reuters) - Emerging market shares and currencies rose on Tuesday on a cautious return of risk appetite as several countries eased coronavirus-induced lockdowns and oil prices rallied.

U.S. states California and New York on Monday outlined plans for reopening businesses, while several other countries including Spain, Italy, Turkey, India, and Malaysia also tentatively eased lockdowns.

Following Wall Street’s rally overnight, MSCI’s index of emerging market shares climbed 0.9%, while its index of developing world currencies firmed 0.2% as the dollar traded flat.

Tuesday’s gains come a day after a raft of sombre manufacturing surveys across the world highlighted the impact of severely reduced economic activity, and soured sentiment.

“Gradual easing of lockdown measures around the world... should be supportive of recovery momentum and broad sentiment,” said a team of analysts at Maybank led by FX research head Saktiandi Supaat.

Shares in Turkey, South Africa and Russia rose between 0.5% and 1% and while China and South Korea were closed for holidays, most other Asian bourses rallied, taking an index of regional shares excluding Japan up 0.9%.

The offshore yuan traded 0.1% higher against the dollar, with analysts and investors keeping a close eye on the currency as tensions between the United States and China regarding the origin of the novel coronavirus outbreak brewed.

An internal Chinese report warned that Beijing faces a rising wave of hostility that could tip relations with the United States into confrontation, sources said, leaving daunting questions regarding a trade truce between the world’s two biggest economies.

Malaysia’s ringgit traded flat after the central bank cut its key interest rate by 50 basis points to 2% as expected, its biggest cut since 2009.

While most other Asian currencies made measured moves, commodity linked currencies such as Russia’s rouble and South Africa’s rand firmed more than 1%.

Oil and base metal prices rose on expectations that demand will begin to recover as economies reopen.

Turkey’s lira fell 0.1%, trading on the wrong side of the 7 to the dollar threshold even as the number of COVID-19 deaths and new cases in the country slowed. President Tayyip Erdogan said lockdown would be eased in some provinces.

“Dollar-lira has reached within a stone’s throw of its 2018 crisis high... A burst of lira depreciation could arrive at any time, without easily identifiable fundamental linkage,” said Tatha Ghose, an analyst with Commerzbank.

“At the current pace of lira depreciation, the risk of a currency spiral, as well as the risk of stress on FX liabilities is rising.”

For GRAPHIC on emerging market FX performance 2020, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance 2020, see tmsnrt.rs/2OusNdX

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see (Reporting by Susan Mathew in Bengaluru; Editing by Kirsten Donovan)

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