Russian stocks posted the biggest weekly drop since May 2012 before a referendum in Ukraine’s Crimea region on whether to join Russia. Government bonds and the ruble fell as the central bank held interest rates.
Goldman Sachs Group Inc. predicts Russia will contain losses in the ruble as policy makers pledge to curb volatility after ratcheting up interest rates and selling billions of dollars in the currency market yesterday.
The plunging ruble is prompting Morgan Stanley to switch its interest-rate forecast to an increase from a cut as inflation risks mount, punishing holders of Russian bonds already roiled by rising tensions with Ukraine.
The smallest difference in three months between yields on Israel’s inflation-linked and fixed- rate bonds is signaling the central bank may keep interest rates on hold without causing consumer price growth to pick up.
Romania’s leu may fall to the lowest level in more than three months as the government faces a no- confidence vote from political parties opposed to International Monetary Fund-backed austerity measures.
Emerging-market currencies are diverging by the most in two years as investors increasingly focus on the strength of underlying economies in anticipation of the Federal Reserve paring its unprecedented monetary stimulus.