EMERGING MARKETS

EMERGING market stocks eked out gains ysterday as investors awaited the US Federal Reserve’s policy address last night, while Turkey’s lira fell for a fourth consecutive session as analysts warned of more trouble for the currency.

The rand barely moved, biding at R16.53 to the dollar, at 5pm.

On the JSE, the all share index gained 0.39 percent to 56707.74 points, while the Top40 index also rose by 0.39 percent to 52245.75.

Few big bets were made ahead of the Fed’s release of its policy statement last night. Markets were expecting a dovish stance from the US central bank and reassurance of its commitment to endless stimulus.

The MSCI’s index for developing market stocks edged 0.2 percent higher, rising for the second day, with markets in China leading gains in early hours of trading.

Turkey’s lira weakened against the dollar, after sinking to its lowest level since mid-May on Tuesday, ending what analysts called two months of calm engineered by costly state interventions.

The Central Bank of the Republic of Turkey (CBRT) and state banks have sold billions of dollars to keep the lira stable, according to data and sources, and traders calculate these interventions amounted to some $100 billion (R1.6 trillion) since they began early last year.

The various forms of intervention appear to have been costly from a use of reserves perspective, said Phil Torres, senior portfolio manager at Aegon Asset Management.

“Selling of the lira is due... we see limits to the CBRT’s ability to contain this effect and expect more weakness over the medium term,” Torres said.

This has now sparked worries about Turkey’s depleted reserves, high external payment obligations and rising current account deficit. I Reuters