Rising USD, Yields Keep Lid on Emerging Stocks, Currencies

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April 28 Reuters A jump in U.S. Treasury yields and a firmer dollar kept emerging market currencies in check and stymied developing market stocks on Wednesday as investors awaited a U.S. Federal Reserve meeting.

MSCIs indexes of emerging currencies and stocks slipped 0.1 ahead of the Fed meeting. Markets are hoping for confirmation that policymakers have no appetite to tinker with support for the economy following a recent run of good U.S. data.

We expect more of the same from Fed at the upcoming meeting, framing the story of no rate hike until 2024 and that Fed will be patient of inflation overshoots and be behind the curve in terms of tightening policy, analysts at Maybank wrote in a note to clients.

Meanwhile, U.S. President Joe Biden will also address Congress later in the day and is likely to underscore his administrations plans for mass infrastructure and stimulus spending.

An improving U.S. economy and expectations for big fiscal spending are causing more investors to question the levels of quantitative easing through bond purchases and how much inflation policymakers would tolerate.

The benchmark U.S. Treasury yield climbed to a twoweek high and the dollar index gained 0.2, leaving limited breathing space for emerging currencies.

South Africas rand weakened 0.2 while the Turkish lira climbed 0.4 in a third day of gains, with local bankers crediting locals buying lira for advances in recent days.

Russias rouble strengthened 0.4 to trade below 75 to the…

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