The Chilean peso led modest declines among emerging-market currencies Friday, dragged down by the Chilean central bank's surprise interest-rate cut.
Most other emerging-market currencies were a touch weaker Friday, likely on the back of profit-taking after this week's gains, analysts said. Emerging-market currencies broadly gained in the past two sessions, amid a resolution to the U.S. government shutdown and debt ceiling crisis. With that issue on the sidelines until early 2014, and the Federal Reserve's economic stimulus expected to remain in place for the rest of the year, analysts say emerging-market assets should resume their gains in the near term.
"The fiscal news is down the road, and [Fed stimulus] tapering is down the road," said Win Thin, global head of emerging-market currency strategy at Brown Brothers Harriman. "In the absence of that the market is going to be taking [emerging markets] higher in the next week."
Mr. Thin said Friday's losses were likely due to investors booking profits after a positive week for emerging-market currencies.
The Chilean peso was a top decliner, largely due to the unexpected interest rate cut. On Thursday, Chile's central bank lowered its benchmark policy rate for the first time since January 2012, by 25 basis points to 4.75%, citing a weaker global outlook. The peso weakened 0.8% against the dollar, which bought CLP497.30, according to CQG.
Most other Latin American currencies also fell against the dollar, though modestly. The Brazilian real slid 0.5% against the dollar, which traded at BRL2.1632, according to CQG. The Mexican peso was little changed on the day against the U.S. currency, which bought MXN12.7967.
Most European and Asian currencies also traded in relatively tight ranges. The Indian rupee fell 0.3% against the dollar, as investors worried that the Reserve Bank of India could remove one of its rupee-supportive measures. However, the RBI later confirmed that the measure--a dollar swap window for oil importers--remains operational, which helped ease some of the rupee's losses. However, market concerns about the removal of the swaps shows that the rupee still relies heavily extraordinary policy measures for support, Morgan Stanley analysts said in a note Friday.
"The removal of [extraordinary policy measures] poses a risk for the currency and highlights the need for further interest rate adjustment," Morgan Stanley analysts said. They added that a hike in the RBI's policy rate later this month "would help to reinforce the strengthening trend" in the rupee.
The rupee slipped 0.2% Friday against the U.S. currency, which changed hands at INR61.24 in offshore trading, according to CQG.
Most other emerging-market currencies were a touch weaker Friday, likely on the back of profit-taking after this week's gains, analysts said. Emerging-market currencies broadly gained in the past two sessions, amid a resolution to the U.S. government shutdown and debt ceiling crisis. With that issue on the sidelines until early 2014, and the Federal Reserve's economic stimulus expected to remain in place for the rest of the year, analysts say emerging-market assets should resume their gains in the near term.
"The fiscal news is down the road, and [Fed stimulus] tapering is down the road," said Win Thin, global head of emerging-market currency strategy at Brown Brothers Harriman. "In the absence of that the market is going to be taking [emerging markets] higher in the next week."
Mr. Thin said Friday's losses were likely due to investors booking profits after a positive week for emerging-market currencies.
The Chilean peso was a top decliner, largely due to the unexpected interest rate cut. On Thursday, Chile's central bank lowered its benchmark policy rate for the first time since January 2012, by 25 basis points to 4.75%, citing a weaker global outlook. The peso weakened 0.8% against the dollar, which bought CLP497.30, according to CQG.
Most other Latin American currencies also fell against the dollar, though modestly. The Brazilian real slid 0.5% against the dollar, which traded at BRL2.1632, according to CQG. The Mexican peso was little changed on the day against the U.S. currency, which bought MXN12.7967.
Most European and Asian currencies also traded in relatively tight ranges. The Indian rupee fell 0.3% against the dollar, as investors worried that the Reserve Bank of India could remove one of its rupee-supportive measures. However, the RBI later confirmed that the measure--a dollar swap window for oil importers--remains operational, which helped ease some of the rupee's losses. However, market concerns about the removal of the swaps shows that the rupee still relies heavily extraordinary policy measures for support, Morgan Stanley analysts said in a note Friday.
"The removal of [extraordinary policy measures] poses a risk for the currency and highlights the need for further interest rate adjustment," Morgan Stanley analysts said. They added that a hike in the RBI's policy rate later this month "would help to reinforce the strengthening trend" in the rupee.
The rupee slipped 0.2% Friday against the U.S. currency, which changed hands at INR61.24 in offshore trading, according to CQG.
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