Emerging Markets React to U.S. Dollar Movements and Wall Street Rally

Emerging market currencies displayed a mixed performance as the U.S. dollar eased. This was influenced by Wall Street's rally following U.S. inflation figures aligning with expectations. Various global financial activities, including Brazil's interest rate hike and China's economic strategy meeting, reflect the market dynamics influenced by global developments.

On Thursday, emerging market currencies showed varied movements in response to a slight easing of the U.S. dollar and a stock rally fueled by Wall Street's performance overnight. The U.S. dollar index remained steady at 106.52, with inflation numbers meeting expectations and setting the stage for a probable Federal Reserve rate cut next week.

The potential rate adjustment prompted an upswing in U.S. stocks, with the Nasdaq crossing the 20,000 threshold for the first time. Following this, the MSCI EM equities index observed a 0.6% rise as of 0947 GMT. Brazil's central bank made waves by raising interest rates by 100 basis points, consequently boosting the real by 1.5% on Wednesday.

Meanwhile, the Russian rouble climbed 1.9% against the U.S. dollar, breaking a two-day losing streak. Stable credit ratings in Central Europe continue to withstand tests, but future evaluations depend on how the new U.S. administration upholds its promises. As Russia and Turkey's currency scenarios unfold, the world's focus also shifts to China's closed-door Central Economic Work Conference chaired by President Xi Jinping, pivotal for next year's economic policies.

(With inputs from agencies.)