“Problems in the euro-area economic landscape still loom large” and “the way out is to restore competitiveness,” Draghi said in a speech in Amsterdam today. “Undertaking structural reforms, budget consolidation and restoring bank balance-sheet health is neither the responsibility nor the mandate of monetary policy.”
The MSCI Emerging Markets Index fell for a second day, retreating 1.8% to the lowest level since November on a closing basis. The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong slid 2%, the most in a week. China’s economy grew 7.7 in the first quarter from a year earlier, less than the 8% median of 41 estimates in a Bloomberg survey. Industrial production rose 8.9% in March, compared with a 10.1% forecast. Russia’s Micex Index sank 1.9% and Brazil’s Bovespa retreated 3.1% for its biggest drop since May.
India’s Sensex index gained 0.6% after a report showed lower-than-estimated inflation. Venezuela’s dollar bonds fell, sending the yield on notes due in 2027 up 33 basis points to 9.41%, as opposition parties challenged the election victory of ex-President Hugo Chavez’s handpicked successor, Nicolas Maduro.
The won strengthened against 15 of its 16 major peers, climbing 0.7% versus the dollar, after the U.S. agreed to work with China, Japan and South Korea to lure North Korea back into nuclear talks.
The yen and dollar rose the most against currencies of commodity-exporting nations, with the New Zealand and Australian dollars and South Africa’s rand weakening more than 3% versus their Japanese counterpart.
Japan will be reminded of its pledge not to drive down the yen when Group of 20 finance chiefs meet this week in Washington. The U.S. Treasury said it would pressure Japan to avoid “targeting its exchange rate for competitive purposes” in its semi-annual currency report to Congress released in Washington on April 12. Bank of Japan Governor Haruhiko Kuroda, who surprised markets April 4 by doubling monthly bond purchases in an effort to end deflation, said today there are signs Japan’s economy is picking up.