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Most Polish government bond yields decreased by up to 4bps on Wednesday while the zloty extended its losses, with the EUR/PLN temporarily rising to 4.1728 after it broke above the 4.155 and 4.167 resistance levels following dovish comments by MPC member Eryk Lon. Lon said that the currency’s appreciation “started to negatively impact exports”, adding that further monetary easing might be necessary “if stock declines continue”.
While most Russian government bonds were generally stable on Wednesday, the ruble depreciated on lower oil prices amid the US dollar’s recovery, with the USD/RUB briefly rising to 56.748.
Most South African government bonds erased earlier gains by the end of Wednesday’s session but the rand appreciated with the USD/ZAR temporarily falling to 11.6225. The currency was driven by expectations that the country would dodge a credit rating downgrade by Moody’s to a ‘junk’ level following the 2018 Budget, in which the Treasury lowered its budget deficit targets for 2018/19, 2019/20 and 2020/21 to 3.6% of GDP, 3.6% of GDP and 3.5% of GDP, respectively, from 3.9% of GDP previously and raised its 2018-2020 GDP growth forecasts to 1.5%, 1.8% and 2.1%, respectively, from 1.1%, 1.5% and 1.9% previously. In addition, the CPI release showed that core inflation (excluding food, non-alcoholic beverages, petrol and energy) nudged down for the fourth successive month last month, to a 6-year low of 4.1% y/y from 4.2% y/y in December, a tad below the consensus forecast of 4.2% y/y.
While most Turkish government bond yields decreased by 3-6bps on Wednesday, the lira appreciated a bit on short covering after it suffered losses in the previous few days, with the USD/TRY briefly falling to 3.783.