The Rand Is Down, Mozambique's Out Of Money: It's The Trump Effect

Stocks and currencies around the world feel the nerves as Trump's inauguration nears.
A military band passes stand-ins for U.S. President-elect Donald Trump and his wife Melania (L), and Vice President-elect Mike Pence and his wife Karen (R) during a rehearsal for the inauguration in Washington, U.S.
A military band passes stand-ins for U.S. President-elect Donald Trump and his wife Melania (L), and Vice President-elect Mike Pence and his wife Karen (R) during a rehearsal for the inauguration in Washington, U.S.
REUTERS/Kevin Lamarque

Emerging stocks registered their biggest daily fall in nearly a month on Monday and currencies broadly weakened with Turkey's lira falling again as investors showed nerves ahead of U.S. President-elect Donald Trump's inauguration.

The South African rand weakened and Mozambique warned it could not make a debt payment due this week.

MSCI's emerging stock index fell 0.7 percent with some heavyweight exchanges in Asia such as Hong Kong, Taiwan down around 1 percent while bourses in Russia and Poland slipped 0.5 percent.

Currencies fared little better.

Turkey's lira led the falls against the dollar, weakening by 1.3 percent and extending losses since the start of the year to 6.3 percent.

Turkish assets have been roiled by worries over its big external financing needs, political reforms, a lackluster economy and security threats.

South Africa's rand nearly matched the losses, weakening by more than 1 percent and chalking up the biggest daily fall in 10 days.

Mexico's peso slipped 0.7 percent.

Across emerging Europe, currencies weakened against the euro. Serbia's dinar slipped 0.2 percent despite the central bank intervening once again to prop up the dinar.

And in eurobond issuance, Argentina started its investor roadshow, aiming to sell $3-5 billion just nine months after it sold $16.5 billion in its return to capital markets. Egypt is also meeting investors in what could be a bumper week for issuance from emerging market countries.

Mozambique's finance ministry said it would not pay the coupon due on January 18 for its 2023 eurobond citing its deteriorating economic and fiscal situation as the country is edging closer to default. The southern African nation, whose total foreign obligations are roughly equivalent to its GDP, said its financial difficulties made its ability to repay debt this year "extremely limited".

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