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PMIs dampen emerging market mood; trade war takes toll on Asian currencies

Helped by the moves in the peso and the lira, the MSCI index for EM currencies was flat

Reuters 

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began the final quarter of 2018 in a mixed mood on Monday as signs of weakness in in and elsewhere limited the optimism from a revamped North American deal that sent the Mexican peso to a near two-month high.

Asian currencies including the Indian rupee, the Taiwanese dollar and South Korea's won all weakened against the dollar after growth in the Chinese stalled in September, suggesting a trade war with the was taking a toll.

Turkey's lira, one of the biggest victims of the outflows of cash from the developing world in the past six months, rode out its own batch of poor data to firm around 1 percent.

have taken heart from signs that a political standoff between and could be resolved soon and from assurances by he would not interfere with policy at a central which delivered a bumper 6.25 percentage point hike in interest rates last month.

"There does seem to be moves by the to improve relations with the US," said William Jackson, at

"We are not seeing the belligerence we saw in August which helped to cause a sharp fall in the lira."

Helped by the moves in the peso and the lira, the MSCI index for EM currencies was flat.

China's financial were closed for a holiday, as was Hong Kong's stock exchange but the offshore version of its yuan weakened by 0.2 percent after the PMI numbers. The rupee shed 0.4 percent and the Taiwanese dollar 0.2 percent.

High-yielding bets in have taken a hammering in recent months, with Turkey, and among those hit hardest, as interest rates in the developed world began to rise, drawing money home.

Donald Trump's battery of trade conflicts has also fed concerns over the pace of growth, crucial to retain investor confidence in developing markets.

The Mexican peso strengthened by over 1 percent after the and on Sunday forged a last-gasp deal to salvage a trilateral pact with

Although had already struck a bilateral trade deal with Mexico, while threatening to leave out Canada, the latest move came as a relief to financial markets as the deal was largely intact and had not fractured supply chains between weaker bilateral agreements.

"With the addition of Canada, it has removed lots of uncertainty that there could be U.S. congressional hurdles in preventing signing a deal with the United States," Jackson said.

First Published: Mon, October 01 2018. 14:51 IST
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