- Reserve Bank of India surprised markets with the start of the tightening cycle.
- The Czech National Bank (CNB) ended the EUR/CZK floor.
- Israeli central bank said it won’t hike rates until Q2 2018.
- Both S&P and Fitch cut South Africa’s rating one notch to sub-investment grade BB+.
- Moody’s put South Africa’s Baa2 rating on review for a downgrade
- S&P upgraded Argentina one notch to B with stable outlook.
- Brazil’s government will water down its pension reform plan
- Brazil’s central bank corrected some errors in its inflation report.
In the EM equity space as measured by MSCI, the Philippines (+3.8%), Chile (+3.5%), and Poland (+3.4%) have outperformed this week, while Korea (-0.7%), Turkey (-0.6%), and Peru (-0.5%) have underperformed. To put this in better context, MSCI EM rose 0.3% this week while MSCI DM fell -0.5%.
Reserve Bank of India surprised markets with the start of the tightening cycle. It hiked the reverse repo rate 25 bp to 6.0% but left the repo rate steady at 6.25%. The decision was unanimous, and we expect further tightening as the year progresses.