EMTurkeys Lira Dips after 5Week Rally; EM Stocks Retreat

Feb 22 Reuters Emergingmarket stocks and currencies fell on Monday, pressured by rising bond yields, with Turkeys lira slipping after five weeks of gains, while South Africas rand fell with eyes on the budget this week.

MSCIs index of developingmarket currencies fell 0.2 against the dollar, while its stocks counterpart lost 1.4 and was on course for its worst day in three weeks as China bluechips slumped over 3 for their sharpest oneday decline in seven months.

U.S. bonds have been bruised by the prospect of a stronger economic recovery and greater borrowing as U.S. President Joe Bidens 1.9 trillion stimulus package progresses.

Rising yields are passing thresholds where they will increasingly support the dollar and threaten highbeta FX more volatile currencies said strategists at JPMorgan.

The level and perhaps speed of the backup in yields is now starting to challenge confidence in the reflationary tailwind to highbeta FX.

Turkeys lira fell 0.7 after gaining around 7 over the last five weeks. Fitch revised Turkeys outlook to stable from negative on Friday, citing a more consistent and orthodox policy mix under a new leadership that has helped ease nearterm external financing risks.

In South Africa, the rand looked to post its biggest oneday decline in six weeks as markets await Finance Minster Tito Mbowenis budget speech on Wednesday for clues on the economys finances. Credit Suisse does not expect many new updates from the mediumterm budget presented in…

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