LONDON Oct 10 (Reuters) – The Polish zloty fell half a
percent on Wednesday, after comments by central bank board
members increased expectations of a rate cut at the next policy
meeting, while South Africa’s rand steadied following a 1.5
percent bounce in the previous session.
Polish central banker Andrzej Bratkowski called for a 75
basis point cut to interest rates by the end of the year, adding
that “nothing terrible would happen” if the zloty weakened.
Monetary Policy Council member Jerzy Hausner was quoted as
saying data would point to the need for a rate
cut.
Poland held rates last week but is expected to cut in coming
months. The comments pushed 2-year and 5-year bond yields lower.
“The zloty is being punished by the very dovish comments
which make a November rate cut much more likely and they may
even go down the road of a 50 basis-point cut at the next
meeting,” said Carolin Hecht, a strategist at Commerzbank in
Frankfurt.
MSCI’s emerging equities fell 0.3 percent, down
for the third day in a row, due to worries over world growth.
The Serb dinar meanwhile rose more than half a percent
against the euro to new 3-1/2 month highs after the central bank
raised interest rates on Tuesday to 10.75 percent, surprising
some in the market who had expected rates to stay on hold.
The dinar has risen for six straight sessions.
The South African rand firmed slightly moving
further away from recent 3-1/2 year lows as some striking
workers agreed to return to work.
Central bank Governor Gill Marcus said the country’s
economic outlook was deteriorating rapidly. Many
see the fallout from the strikes as forcing rate cuts.
“We don’t see this move in dollar/rand as sustainable,”
Hecht said. “We advise buying on dips as we see more risks of
strikes, especially in the mining sector.”
Turkish assets, meanwhile, were hit by a weaker industrial
output data and news that a top general had threatened to
respond “with greater force” if shelling from Syria continues to
spill across the border.
(Reporting by Sujata Rao; Editing by Anthony Barker)
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