Nov 30 Reuters -- Most emerging market currencies dipped on Tuesday on doubts about how effective COVID 19 vaccines are against the Omicron variant, while a gauge for stocks in the developing world was set for its biggest monthly decline in two months.
The U.S. drugmaker Moderna's chief, St phane Bancel, warned that COVID-19 vaccines were unlikely to be as effective against the Omicron variant of the coronaviruses as they were against the Delta version.
The MSCI's index for emerging market stocks fell 0.4%, setting for monthly declines of 4%.
This is not really new news, given what we know about the new mutation but the market is picking up on the explicit comments, said Jim Reid, Deutsche Bank strategist.
The evidence is still incredibly limited on this question, and nothing from Moderna CEO has changed that overnight. The new variant is a cause for central banks to rein in the tightening of monetary policy, as a result of the global financial markets start the week on firm footing, according to analysts.
Currencies in Asia gave back early gains, while units in Europe, Middle East and Africa were trading flat to lower by 0919 GMT. The drop in developing world currencies was also helped by a weaker U.S. dollar.
South Africa's rand dropped 0.1%, while stocks in the region fell the smallest declines among peers on higher gold prices.
Russia's rouble fell 0.4%, with sliding oil prices to blame. The Russian central bank said it will pursue monetary policy that will bring inflation back to its 4% target by the end of 2022.
Turkey's lira fell for the third day in a row, due to a very low interest rate environment. Turkey's president Tayyip Erdogan pledged to never defend interest rate hikes or compromises on the issue.
The lira fell over 42% this year, with the currency losing 42% due to Erdogan's tough stance on keeping interest rates low and influence over the country's central bank.
Tatha Ghose, FX and EM analyst at Commerzbank said that the central bank and regulators have begun to intervene in various ways, targeting market participants with short lira positions, something that has been more interesting over the past couple of days.
The authorities are not really comfortable with the depreciation of the lira, no matter how much they say they want a weak lira. Turkey's economy increased 7.4% year-on-year in the third quarter, meeting expectations, but it didn't help with concerns about monetary policy.