Sept 22 (Reuters) – Emerging market stocks recovered from a four-day losing streak at the end of a week packed with major central bank decisions, while the Indian rupee firmed after JPMorgan’s plans to include the country’s local bonds in its debt index.
MSCI’s index for emerging market equities .MSCIEF rose 0.8% by 0853 GMT on Friday, bouncing off a recent three-month low, but was on track for weekly declines of 2.2%.
Pressuring emerging markets this week was a jump in U.S Treasury yields as investors assessed potential for an additional rate hike from the Federal Reserve and fewer cuts next year following revised projections from the central bank.
Most Asian stock markets were higher on Friday, led by equities in Hong Kong .HSI and mainland China .CSI300, up 2.3% and 1.8% respectively following reports of China’s measures to promote the development of the private economy.
China is considering relaxing the rules that cap foreign ownership in domestic publicly traded firms, Bloomberg News reported on Friday.
Emerging market currencies .MIEM00000CUS edged 0.1% higher but shed 0.2% for the week.
The dollar =USD, meanwhile, was on track for its tenth consecutive weekly increase while the yen JPY=EBS dropped as the Bank of Japan maintained ultra-low interest rates on Friday.
India’s rupee INR= climbed 0.3% against the dollar after JPMorgan JPM.Nsaid it will include the country in its widely tracked emerging market debt index, setting the stage for billions of dollars of inflows into the world’s fifth-largest economy.
JPMorgan’s decision could push India’s benchmark 10-year bond yield to sub-7% levels in the coming months, Citi and Bank of America said on Friday.
Barclays strategists forecast the inclusion implies direct inflows of $20-$25 billion over the next 18-21 months.
“The INR rallied on the index inclusion news, but still faces headwinds from a firm USD, elevated US yields and higher oil prices,” the strategists said in a note.
The South African rand ZAR= strengthened 0.6% versus the dollar and was on track for a weekly gain of nearly 1% despite a drop in the previous session after the country held interest rates steady.
Among central and eastern European currencies, the Polish zloty PLNEUR= rose 0.2% against the euro, ahead of a credit ratings review by Moody’s. The currency has outperformed its regional peers this week and is on track for weekly gains of 1%.
(Reporting by Amruta Khandekar. Editing by Jane Merriman)
