Emerging equities fell on Friday alongside other global markets with investors watching Pakistan after the assassination of opposition leader Benazir Bhutto, and Kenya where election results were coming in.
Emerging currencies were mixed against a broadly weaker dollar, which was undermined by disappointing US durable goods data that boosted hopes of further rate cuts. Global emerging equities fell 0.2 percent. Pakistani markets were closed on Friday with the rupee currency little traded offshore and last quoted at a new three-year low of 61.30 per dollar.
The Indian rupee fell along with local equity markets on Friday on worries foreign investors would withdraw funds in the aftermath of the killing. It later recouped some losses to trade flat around Thursday's close of 39.42/43. "The Indian stock market and (rupee) may be impacted to some extent in the short term," said Calyon Asia Research in a note.
"We believe that a possible impact on India and the Indian rupee should be manageable. But there is risk that the Pakistan issue significantly pushes up risk aversion and adds to other worries in the global financial markets," the bank added.
Pakistan's five-year credit default swaps spiked to 520 points, some 120 bps wider since Bhutto's death as investors factored in unrest in the nuclear-armed state. Globally, the assassination was seen undermining stockmarkets and the dollar and boosting safe havens such as gold, bonds and the Swiss franc.
Most markets were reported very quiet during the holiday period between Christmas and New Year with the Romanian leu the biggest loser in Friday's thin trade. It fell 1.8 percent to a three-week low against the euro.
The Turkish lira and South African rand both gained against the weak dollar, with the latter at a two-week high thanks to a smaller-than-expected trade deficit and strong gold prices.