Emerging-Market Currencies Fall as Mexico Peso, Turkey Lira Sink

(Bloomberg) -- Emerging-market currencies declined as Mexico’s peso and Turkey’s lira slumped to record lows. Stocks rose to the highest level in three weeks as Chinese factories and services data bolstered confidence in the world’s second-largest economy.

Mexico’s peso weakened beyond 21 per dollar after Ford Motor Co. decided to scrap plans to build a $1.6 billion plant in the Latin American nation and U.S. President-elect Donald Trump criticized General Motors Co. for building a version of the Chevrolet Cruze compact there. The Turkish lira dropped 1.4 percent after a report showing inflation accelerated more than estimated in December.

Currencies

• The MSCI EM Currency Index fell 0.1 percent, the most since Dec. 16
• Mexico’s peso slumped 1.8 percent; Brazil’s real and Colombia’s peso led gains in emerging markets
• The onshore yuan slid 0.2 percent after the PBOC weakened the fixing by the most in two weeks

Stocks

• The MSCI EM index of stocks added 0.8 percent, after closing little changed Monday
• The Ibovespa surged 3.7 percent, the biggest gain since Nov. 7
• Petrobras was among the main contributors to the Brazilian’s gauge advance
• Russia’s RTS Index rallied 3.2 percent

Analysis

• On Mexico: “It is going to be a choppy ride as the market and press get to understand the new administration’s policy agenda," said Andrew Stanners, an investment manager at Aberdeen Asset Management, which has $11 billion in emerging-market debt.
• On Turkey: “Market participants are looking for signs that the central bank is taking the inflation threat seriously,” Henrik Gullberg, an emerging-market strategist at Nomura International Plc in London, said by e-mail. “Lira will continue to sell off on bad news like the terrible terror attack, whilst not appreciating back when sentiment is more supportive.”
• On China’s impact: “China’s figures are positive for commodities, especially metals,” said Rafael Ohmachi, an analyst at brokerage Guide Investimentos in Sao Paulo. “Mining, steelmakers and oil producing companies are outperforming.”

Top Stories

• Ford Decision Cements Mexico as ‘Front Line’ for Trump’s Policy Agenda
• BlackRock Sees Shift to Emerging-Market Bonds Resuming in 2017
• Emerging Market ETFs Gain $23.5 Billion in Year, Rebound in Week
• China Stocks Rise After Factory Data; Casinos Fall in Hong Kong
• Turkish Lira Plunges Most Worldwide to Record Low Per Dollar
• Mexican Economy Facing Tough 2017 Even Without Trump’s Wall
  
  

--With assistance from Srinivasan Sivabalan Dana El Baltaji Vinícius Andrade and Ben Bartenstein

To contact the reporters on this story: Aline Oyamada in Sao Paulo at aoyamada3@bloomberg.net, Sharon Wrobel in Tel Aviv at swrobel4@bloomberg.net.

To contact the editors responsible for this story: Rita Nazareth at rnazareth@bloomberg.net, Dana El Baltaji at delbaltaji@bloomberg.net.