(Bloomberg) -- Emerging-market currencies broke a three-day losing streak as the dollar rally wavered with markets continuing to adjust positioning ahead of the US election.
An MSCI gauge of EM currencies gained 0.1%, led by the South African rand and the Czech koruna. In Latin America, the Colombian peso recovered from yesterday’s losses amid domestic political noise.
“The uncertainty ahead of the US elections seems likely to keep risk markets a bit shaky,” BBVA analysts led by Alejandro Cuadrado wrote in a note to clients. “LatAm currencies seem destined to continue to test these technical lows until there is more clarity on the election outcome.”
With two weeks to the US vote, investors are rushing to price in the possibility of a win for Republican candidate Donald Trump, who has pledged to raise import tariffs. Political jitters are worsening sentiment that’s already marred by the failure of China’s repeated stimulus measures to sustainably perk up the market, the war in the Middle East and volatility sparked by a strong dollar and rising US yields.
Brazilian markets reversed losses, with both stocks and the real closing higher after Finance Minister Fernando Haddad pledged fiscal responsibility to calm investors’ concerns about the country’s public spending.
Developing-nation stocks, meanwhile, clocked a fourth day of losses in the longest losing streak in six weeks.
In credit markets, Argentina’s bonds rallied on reports that the government is negotiating a credit line to meet its principal debt obligations next January. The country is in talks with several banks to obtain a so-called repo line of around $2.7 billion.
Sri Lanka plans to start a swap of its defaulted dollar debt for new bonds in November, with the new notes expected to start trading in December, according to people familiar with the matter.
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