LONDON, Sept 6 (Reuters) – Emerging stocks inched up from
five-week lows on Thursday before a European Central Bank
meeting that could produce a much-anticipated bond-buying
programme, while Ukraine’s hryvnia was flat after central bank
action raised it off 2-1/2 year lows.
All eyes are on the ECB’s policy announcement at 1145 GMT
and President Mario Draghi’s news conference at 1230 GMT, as
markets look for details of potential bond-buying which could
significantly lower Spanish and Italian borrowing costs.
A string of leaks from euro zone officials has provided
markets with confidence that Draghi will back up his July 26 vow
to do “whatever it takes” to save the euro.
Investors pushed MSCI’s main emerging index 0.3
percent higher after two days of losses while emerging
European stocks jumped 1 percent.
Shanghai rebounded 0.7 percent off 3-1/2 year lows
after reports the government had approved over $100 billion
worth of rail projects.
Turkish shares, one of the best emerging performers
of 2012, touched new 16-month highs on hopes of policy easing.
On currencies, the Polish zloty bounced 0.5 percent off
Wednesday’s six-week lows while the Hungarian and
Czech currencies rose 0.3 percent .
Ukraine’s hryvnia, meanwhile, was at one-week highs, having
been lifted off December 2009 lows thanks to dollar-selling by
state-run Oshchadny Bank on Wednesday. The currency, pegged at
about 8 per dollar since early 2010, hit a low of 8.18 on
Tuesday and is now trading at 8.14 per dollar.
Analysts attribute the plunge to the redemption of
government bonds by foreign investors who chose not to reinvest.
Weak foreign trade and current account data have boosted
conviction that a devaluation looms after October elections.
“High devaluation fears and the abundance of extra liquidity
may still pressure both the interbank and cash FX market,” ING
analysts wrote. “We believe this will continue and (the
hryvnia/dollar exchange rate) may end up testing new 3-year
lows.”
(Reporting by Sujata Rao; Editing by Ruth Pitchford)
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