BENGALURU (August 23): Most emerging market currencies remained under pressure on Friday and China's yuan fell to an 11-year low amid doubts. US Federal Reserve leader Jerome Powell will signal a lengthy series of interest rate cuts in a speech later.
The South African rand was an exception, reaching 0.6% after the Treasury pledged to cut costs and keep spending down. Most other currencies were little changed.
MSCI's index of currencies in developing countries is on track for a fifth straight week of losses amid concerns about an escalation in the US-China trade war, US bond markets warning of a recession horizon and a decline in Argentina's markets.
China's yuan fell for a seventh straight session, though the central bank fixed its official midpoint at a stronger interest rate than the markets expected.
The United States and China show little sign of resolving their trade conflict and taking a toll on global growth. Investors are betting that decision makers will turn to stimulus measures.
A July meeting of the Fed on Wednesday, however, revealed that policy makers were reluctant to make aggressive interest rates and allowed traders to stick to a quarterly rate cut in September. All eyes will turn to Powell's keynote speaker at the Jackson Hole Symposium at. 1
"Powell is likely to support expectations of further cuts going forward (and emphasizes that the end of [quantitative tightening] is already behind us)," RBC chief currency strategist Adam Cole wrote in a note.
"But with markets that are already so aggressively priced, it will take a complete turn from Powell to push expectations of lower prices still, and we believe the risk balance is USD positive."
The gain for most Asian stock markets MSCI's EM stock index pulled up 0.3%, at a price for its first week with a gain of five.
Chinese stocks delivered their best weekly results in two months after White House economic adviser Larry Kudlow said Thursday that Washington is planning another round of talks with Beijing next month.
Indian equities were given hope of stimulus measures to revive growth. Finance Minister Nirmala Sitharaman is scheduled to hold a press conference later in the day, amid reports that the government may roll back higher taxes for foreign portfolio investors.
S&P Global is eligible to review Lebanon's sovereign credit rating later in the day. The markets are prone to a downward risk as worries about the country's economy increase.
S&P put the country's B-rating on a negative perspective in early March. Lebanon bears one of the world's heaviest public debt loads, at 150% of gross domestic product, after years of slow economic growth.