Currencies fall as dollar firms, fears of Russia sanctions hit stocks

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Emerging market currencies fell against a stronger dollar on Wednesday on worries over aggressive actions by the US central bank to curb inflation.

Commodity-exposed SA stocks shed 0.2%, weighed by miners after prices of most industrial metals dropped on Wednesday.Emerging market currencies fell against a stronger dollar on Wednesday on worries over aggressive actions by the US central bank to curb inflation, and as the anticipation of more Western sanctions on Russia pressured stocks.

Fed Governor Lael Brainard said she expects a combination of interest rate hikes and a rapid balance sheet runoff to bring US monetary policy to a “more neutral position” later this year, with further tightening to follow as needed.“What now matters is what the Fed does in May and what signals it sends out regarding interest rates this year,” said Antje Praefcke, FX and EM analyst at Commerzbank.

Emerging markets were also jittery as the United States and its allies prepared new sanctions on Moscow over civilian killings in Ukraine. Asian emerging markets took cues from declines in China, with both stocks and the onshore yuan falling on concerns over a worsening economic growth outlook after Shanghai extended its coronavirus lockdown.

 

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