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Rouble Gains on Oil Strength, Rand Hit by Vaccine Snag

Feb 8 (Reuters) - Russia’s rouble was propped up by strong oil prices on Monday, while emerging market stocks traded close to record highs on optimism over a global economic recovery, enabled by steady vaccine rollouts.

But South Africa’s rand fell 0.5%, as its vaccination programme hit a snag after the government put on hold the use of AstraZeneca’s vaccine.

A trial showed the vaccine gave only minimal protection from mild-to-moderate infection caused by the coronavirus variant that is dominant in South Africa, although it was effective in preventing severe infection.

The rouble rose 0.4% to an over-two-week high against the dollar, as oil prices hit a their highest in over a year on supply cuts and hopes of recovering demand.

Russian stocks were supported by the heavyweight energy sector, adding 1.3%.

Broader emerging market stocks also rose as investors bet on global vaccine rollouts resulting in a quick economic recovery, with the MSCI’s index of EM stocks trading about 11 points below a record high.

Turkey, South Africa and most Asian countries have begun vaccination drives since last month, which are expected to spur an eventual return to normalcy.

U.S. stocks had ended Friday at record highs, while bourses across Asia also gained in anticipation of new U.S. stimulus, as well as expectations of easy monetary policy.

“Slowing coronavirus infections, continued rollout of vaccines, and anticipation of President Biden’s $1.9 trillion rescue package is keeping the bull market well and truly alive,” Hussein Sayed, chief market strategist at FXTM, wrote in a note.

“Investors will need to closely monitor when monetary policymakers in the U.S. and the rest of the world signal that they are turning the music down. That would be the time for exit. Until then, bulls are likely to continue enjoying the ride.”

While EM stocks in Europe, the Middle East and Africa rose, most currencies retreated slightly from strong gains made last week.

Most central European stocks rose, while currencies in the region fell slightly against the euro.

The Hungarian forint lagged its peers after the country’s trade surplus came slightly below expectations in December.

The Polish zloty was muted to the euro, while stocks rose 0.4% after the central bank said interest rates in the country would likely remain stable in coming months.

(Reporting by Ambar Warrick in Bengaluru, editing by Ed Osmond)

Source: Reuters

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