Forex - Emerging Europe Closing Summary and Highlights 22 May

 15:30 (GMT) 22 May

  [Forex Highlights]

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Emerging Europe Closing Summary and Highlights 22 May (0101-LNXJ-C01)


Most Polish government bond yields decreased by up to 16bps on Wednesday and the zloty was generally stable, outperforming its CEE3 peers with the EUR/PLN trading in the 4.3036-4.3111 range. The currency was helped by data showing that industrial output growth and PPI inflation accelerated to 9.2% y/y and 2.6% y/y in April, respectively, from 5.6% y/y and 2.5% y/y in March, a tad above the consensus forecasts of 9.0% y/y and 2.4% y/y, respectively.


While Russian government bond yields decreased by 2-14bps across the curve on Wednesday, the ruble continued to strengthen with the USD/RUB briefly falling to 64.1545 after it broke below the 64.32 support level. Demand for government bonds remained driven by rising expectations of impending monetary easing by the CBR and was helped by comments from the head of Finance Ministry's debt department, Konstantin Vyshkovsky. Vyshkovsky said late on Tuesday that the government might cut the volume of debt offering in H2 2019 and return to announcing limits ahead of auctions.


Most South African government bond yields decreased by 6-8bps on Wednesday and the rand gained slightly, outperforming other EMEA currencies with the USD/ZAR temporarily falling to 14.3391. Assets were supported by data revealing that headline CPI inflation nudged down to 4.4% y/y in April from 4.5% y/y in March, slightly below the consensus forecast of 4.5% y/y as well as reports that Deputy President David Mabuza asked to delay his swearing-in as an MP as he fights corruption allegations.


While Turkish government bond yields rose by 7-40bps across the curve on Wednesday, the lira extended its losses, still underperforming other EMEA currencies with the USD/TRY briefly rising to 6.1124. Assets were hurt by deterioration in global sentiment after Bloomberg reported that the U.S. was considering blacklisting up to five Chinese surveillance companies. In addition, Defense Minister Hulusi Akar said that the authorities were preparing for possible U.S. sanctions over the acquisition of the Russian S-400 missile system following the CNBC report that the U.S. had given Turkey until June 1 to decide between the U.S. and Russia missile systems.

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