Moves in the developing currencies index were largely driven by the US dollar Thursday, which wavered between gains and losses on a string of news reports about the Federal Reserve. Earlier, the dollar climbed after Federal Reserve Governor Christopher Waller emerged as the favorite pick for Jerome Powell’s replacement, easing investor concerns over the Fed’s independence. But reports on Stephen Miran’s nomination to the Fed board subsequently added pressure to the greenback.
Developing-nation currencies and stocks advanced Thursday as positive signals on global trade and steps toward a truce in Ukraine supported risk sentiment.
The MSCI index for EM currencies ended the day with a 0.3% gain, as names in eastern Europe climbed on optimism of a ceasefire in Ukraine. The MSCI EM Index for equities climbed 1.3%, the most in two weeks, as chip manufacturer Taiwan Semiconductor Manufacturing Co rose to a record on the prospect of being exempted from US semiconductor tariffs.
Semiconductor shares “have performed strongly today in view of the tariff exemption announcement,” said Matthew Peacock, an emerging-market equities analyst at Aberdeen in London, who also cited the higher likelihood of a US rate cut in September. “While this is positive for EM stocks, volatility will likely persist for the remainder of the year due to ongoing tariff uncertainties.”
