Bengaluru — Emerging-market stocks neared a record high on Friday as hopes of economic recovery and loose monetary policy lifted sentiment, while most currencies in Europe, the Middle East and Africa fell against a recovering dollar.
Progress in coronavirus vaccines has helped MSCI’s EM index rally 24% since October, well above US equities, with the prospect of favourable US trade policies under a new administration and record-low interest rates also lending support.The Democrats’ taking of the US Senate this week also spurred capital flows into assets outside the US, as the possibility of increased fiscal spending and corporate taxes took some sheen off US risk assets.
“Now, investors are gravitating towards the increased likelihood of more incoming US fiscal stimulus in light of the Democrats’ sweep of the Georgia Senate runoffs.” Turkey’s lira dropped 1.1% from a 4.5-month high as the central bank's net international reserves fell to their lowest in nearly two decades. The central bank bled out its 2020 reserves to protect the lira from pandemic-led disruptions, though the currency began to recover after the bank embarked on a steep rate-hiking spree towards the end of 2020.