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* Markets shrug off ratings downgrade on S.Africa
* EM stocks hit new 32-month highs
* Vaccine hopes boost global mood
* Lira bucks trend with almost 2% fall
By Sruthi Shankar
Nov 23 (Reuters) - The South African rand jumped on Monday
despite a pair of sovereign ratings downgrades, while emerging
market stocks raced to a fresh 32-month high on hopes of an
early rollout of COVID-19 vaccines.
The rand gained 0.8% with the safe-haven dollar under
pressure, while a widely watched EM equities index
rose 0.9% to hit new highs since March 2018, supported by strong
gains across Asian bourses.
Investors shrugged off news that credit rating agencies
Fitch and Moody's had both cut South Africa's sovereign ratings
further into junk - moves that the finance ministry warned could
drive up the government's borrowing costs and constrain the
fiscal options.
Russia's rouble, Mexico's peso rose about half
a percent each, while their Asian peers also edged higher.
The mood across global markets brightened at the start of
the week as a top U.S. official said health regulators would
likely grant approval for distribution of the COVID-19 vaccine
produced by Pfizer and German partner BioNTech
in mid-December.
Meanwhile, Britain's AstraZeneca said its vaccine
could be around 90% effective without any serious side effects.
"In a reversal of the COVID trade, some currencies with weak
fundamentals (such as ZAR, TRY) should play catch-up to the
stronger ones (North Asian currencies for example)," EM
strategists at Societe Generale wrote in a note.
"This rotation means that the high degree of divergence seen
in 2020 will continue into next year and leave average EM
currency performance roughly flat."
Stocks and currencies in the developing world surged to 2018
highs earlier in November, boosted by trade-reliant Asian and
Mexican markets after Joe Biden's victory in the U.S.
presidential election raised hopes of friendlier trade policies.
The Turkish lira remained an outlier, giving back
more than 1% to trade at 7.74 per dollar after a stellar run in
the past weeks following a 475-basis-points policy rate hike by
the central bank.
Analysts said some of the weakness was due to profit-taking
after the currency rallied from a record low of 8.58 against the
dollar earlier this month.
For GRAPHIC on emerging market FX performance in 2020, see http://tmsnrt.rs/2egbfVh
For GRAPHIC on MSCI emerging index performance in 2020, see https://tmsnrt.rs/2OusNdX
For TOP NEWS across emerging markets
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see
(Reporting by Sruthi Shankar in Bengaluru, graphic by Marc
Jones in London
Editing by Gareth Jones)
