March 3 (Reuters) - Emerging markets stocks and currencies rose on Tuesday after the U.S. Federal Reserve cut interest rates in an emergency move to combat the impact of the coronavirus outbreak, raising hopes for other central banks around the world to follow suit.
The U.S. central bank said it was cutting rates by half a percentage point to a target range of 1.00% to 1.25%, shortly after a statement from G7 financial officials earlier in the day failed to detail concrete measures to help economies stabilize from damage caused by a fast-spreading coronavirus outbreak.
“Clearly the Fed is alarmed by the risks posed directly by the coronavirus, but also indirectly via the panic that took hold of financial markets last week,” said James McCann, senior global economist at Aberdeen Standard Investments.
“This step should provide some comfort to markets, boost borrowers and help support confidence.”
The surprise move sent the U.S. dollar to a fresh six-week low, before paring losses and helped MSCI’s index for emerging market currencies gain 0.4%, while its Latin American counterpart rose 0.8%.
A basket of emerging market stocks rose 1.4%.
Turkey’s lira outperformed its peers with a 1.5% jump to 6.0268 against the greenback, briefly touching its strongest level in nearly three weeks.
“The Turkish lira was one of the worst performing currencies last week, so investors are clearly happy with the stimulus measures being brought forward,” said Jason Tuvey, senior emerging markets economist at Capital Economics.
Turkish stocks also led gainers with its 3.6% jump, among equities in the emerging markets space, while Argentine stocks led gains among Latin American equities.
South Africa’s rand also firmed against the dollar, reversing losses from earlier in the day which were triggered by data that showed Africa’s most industrialized economy entered its second recession in two years in the final quarter of last year.
Russia’s rouble added to gains after the rate decision by the Fed as well as being boosted by a recovery in oil prices.
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For RUSSIAN market report, see (Reporting by Shreyashi Sanyal in Bengaluru; additional reporting by Karin Strohecker in London; Editing by Lisa Shumaker)