Emerging market currencies rose from near two-year lows; fall in stocks

* FX down 0.4% this week; 2% off

* US CPI data due 1230 GMT

* Lira extends sell-off, last at $15.3

* Malaysia C.Bank unexpectedly raises rates

by Anisha Sarkar

May 11 (Reuters) – Emerging market currencies rose from an 18-month low on Wednesday amid a slight uptick in risk sentiment ahead of closely-watched US inflation data, while the Turkish lira slid for the fifth straight day, and December’s moved to the lower level.

MSCI’s EM currencies index rose up to 0.1% after falling to its weakest level since November 2020 at the start of the week, as riskier EM assets came on the heels of consolidating US monetary policy and a stronger dollar. began to lose its charm.

Investors’ attention is now on the April US Consumer Price Index print, due at 1230 GMT on Wednesday, for clues as to how aggressively the Federal Reserve will raise rates, with analysts expecting a sharp drop in monthly growth.

The dollar slipped slightly to 103.81, but remained close to a two-decade high of 104.49 at the start of the week.

“Since the beginning of April, the currency market has been a one-way street in favor of the dollar – dollar bulls need to recharge at current levels, supporting demand for EM currencies,” said Alex Kuptsievich, a senior financial analyst at FxPro. said. ,

Kuptsikevich said the market sees a slight decline in the dollar and a local correction in US Treasury yields as an opportunity for what could actually become a long-term trend.

Tracking broadly higher global stocks, the stock rose 0.4% to break a seven-day losing streak.

Sentiment remains under pressure this week amid concerns about central bank actions, Russia’s war on Ukraine, inflation concerns and demand from China as it tightens COVID-19 restrictions.

On Wednesday, however, China shares rose nearly 2% as official data showed lower domestic COVID-19 infections and April’s higher producer prices left room for more stimulus.

Meanwhile, Turkey’s lira fell for the fifth consecutive day, down 0.7% to trade at 15.3, near its record low of 18.4 during the currency crisis in December 2021.

story continues

The lira has declined 13% so far this year after a 44% drop in 2021.

Elsewhere, Malaysia’s ringgit rose 0.1% after its central bank unexpectedly raised the benchmark interest rate to 2% from a record low of 1.75, as commodity prices rose, strained supply chains and strong demand. The situation eased inflationary pressures.

For a graphic on emerging market FX performance in 2022, see https://tmsnrt.rs/2OusNdX for a graphic on MSCI emerging index performance in 2022.

For top news in emerging markets

View Central Europe Market Report for

View Turkey Market Report

For the Russian market report, see (Reporting by Anisha Sarkar in Bengaluru; Editing by Uttaresh. V)