• Wed. Sep 23rd, 2020

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RPT-EMERGING MARKETS-S.African rand falls ahead of GDP data; Turkish lira hits new lows

(Repeats with no change to headline or text)

* S.African GDP expected to shrink 44.5%; data due at 0930 GMT

* MSCI EM stocks index up after 4 days of losses

* Romanian GDP contracts 10.5% in Q2; leu flat

* Greece to bolster defence as east-Med tensions with Turkey rise

By Susan Mathew

Sept 8 (Reuters) – South Africa’s rand fell on Tuesday with investors bracing for dismal GDP data due later in the day, while most other emerging market currencies made muted move against a stronger dollar, with Turkey’s lira hitting new lows.

Stocks in the developing world were back in positive territory for the first time in a week, with the MSCI index gaining 0.3% as market participants waited to see if Wall Street can continue a tech rally after an extended weekend.

But anti-Chinese rhetoric from U.S. President Donald Trump, who again mooted the prospect of de-coupling the U.S. and Chinese economies, kept fears of an escalation in tensions between Washington and Beijing alive.

The dollar gained amid the uncertainty, pressuring riskier currencies.

South Africa’s rand erased early gains to trade down 0.3%, with data at 0930 GMT expected to show the recession-hit economy contracted at its worst pace ever – 44.5% on an annualised basis – in the second quarter.

“The rand is only likely to react to this glance into the rear-view mirror in case of major surprises,” said Elisabeth Andreae, an FX analyst with Commerzbank.

“A quick recovery of the economy… seems unlikely, in particular as reforms are making only hesitant progress and the ailing budget situation does not allow for major economic programmes. Due to the fragile economy ZAR investments remain high-risk.”

South African stocks were up 0.4%, in line with most other emerging market peers.

Turkey’s lira fell 0.2% as tensions with Greece over energy resources in the eastern Mediterranean grew. Athens plans to acquire arms, boost its armed forces and revamp its defence industry, the government’s spokesman said on Monday.

Subdued oil prices kept Russia’s rouble flat, while in central and eastern Europe, currencies made minor moves against a weaker euro which eyed a European Central Bank meeting on Thursday.

Romania’s leu was flat, caught between data that showed the economy contracted 10.5% on the year in the second quarter, while separate data showed net average wages in the country rose in July on a year-on-year basis as well as from June.

Reporting by Susan Mathew in Bengaluru; Editing by William
Maclean

Our Standards:The Thomson Reuters Trust Principles.

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