EMERGING MARKETS-Rouble rattled by weak oil prices; Data-heavy week in focus

* Rouble among worst performers on weak oil prices

* Turkey’s lira among few gainers, but at 2018 crisis levels

* U.S., euro zone PMIs awaited later in the week

By Ambar Warrick

April 20 (Reuters) – Developing world risk assets fell on Monday as plunging oil prices rattled sentiment, with investors now looking to a data-heavy week for more signs of economic damage from the coronavirus pandemic.

Markets eye preliminary April business activity readings from the United States and the euro zone later this week, in the backdrop of dismal figures in March, as it is expected to underscore the full extent of the economic damage from virus-related lockdowns.

Emerging markets would also be the first to bear the brunt of a virus-driven selloff, given their high propensity for risk. While a mild recovery was seen over the past few weeks, investors remain wary of a rout similar to that seen in March.

Adding to concerns over the pandemic, oil futures fell with U.S. futures dropping to levels unseen since 1999 amid concerns that the market will be bloated with supply as demand evaporates.

Russia’s rouble was among the worst performing currencies for the day. In addition to weak oil prices, the rouble was also pressured by the central bank last week signalling further interest rate cuts to stymie the economic hit from the outbreak.

“This is significant because the central bank had paused rate cuts last month because of elevated RUB volatility. EM FX volatility still remains elevated; but, it appears to be calming down since its peak of late-March,” Tatha Ghose, FX & EM Analyst at Commerzbank wrote.

“We stick with our existing base-case that the central bank will lower the benchmark rate by 25 basis points on Friday.”

Russian stocks were flat.

The South African rand dropped about 0.8% to the dollar, while stocks in the country traded slightly lower.

Turkey’s lira was among the few outliers, rising about 0.7%. Still, the currency was around levels last seen during a debt crisis in 2018 when it had plummeted to record lows.

Turkish stocks rose about 1%. Markets were also awaiting an interest rate decision by the country’s central bank on Wednesday.

The MSCI’s index of developing world stocks fell about 0.2%, also reflecting weakness in Asian stocks. The currencies index was flat.

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

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For RUSSIAN market report, see (Reporting by Ambar Warrick in Bengaluru; editing by Uttaresh.V)

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