Emerging Market Currencies Rise Amid Fed Rate Cut Speculations

Emerging market currencies gained against the dollar as bets on larger Federal Reserve interest rate cuts increased. The MSCI index rose, driven by China's yuan. Market jitters were influenced by U.S. employment data and upcoming Fed meetings. Key attention remains on the U.S. services industry and nonfarm payroll reports. Central Eastern European currencies traded steadily, while South Africa's rand and Malaysia's ringgit appreciated. Meanwhile, Mexico's peso briefly dipped after judiciary reforms.

Emerging market currencies edged up against the dollar on Thursday amid growing expectations for larger interest rate cuts by the Federal Reserve. New U.S. data, due later, remains the focal point.

The MSCI index for emerging market currencies climbed 0.2%, buoyed by a 0.2% rise in China's onshore yuan. Data revealed U.S. job openings dropped to a 3-1/2-year low in July, indicating a weakening labor market. A Fed survey further suggested slower economic activity from mid-July through late August. Economist Mohit Kumar noted market jitters due to unflattering employment data.

Traders anticipate a potential 50-basis-point rate cut at the next Fed meeting. Key U.S. services industry data and jobless claims remain in focus, with the primary concern being Friday's nonfarm payroll report. Central Eastern European currencies traded stably, while South Africa's rand gained 0.6%. EM stocks rose 0.3% after previous declines. China's economic pledges and Mexico's judicial reforms also influenced market movements.

(With inputs from agencies.)