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EMERGING MARKETS-Stocks at 9-month high; EMEA currencies rise on U.S. stimulus hopes

Ambar Warrick
·2-min read

* Turkish lira hits 2-week high

* Hungarian forint firms after c.bank holds rates

* Russian rouble lags slightly on raft of weak data

By Ambar Warrick

Oct 21 (Reuters) - Emerging market stocks hit a nine-month high on Wednesday while currencies in Europe, the Middle East and Africa rose on optimism over U.S. stimulus and investors also awaited major regional central bank meetings later in the week.

The MSCI's index of emerging market stocks rose about 0.5% to pre-pandemic highs, tracking gains on Wall Street in the wake of positive comments from the White House and U.S. Democrats over signing a new stimulus bill.

EMEA currencies rose as the dollar retreated, with the Turkish lira touching a two-week high to the greenback, while the South African rand rose 0.6%.

Markets are anticipating a 175 basis point rate hike by Turkey's central bank on Thursday, as it struggles to plug a sliding lira and runaway inflation.

The Hungarian forint rose about 0.4% to the euro, leading gains across its central European peers after The National Bank of Hungary left rates unchanged on Wednesday, as a slight easing in inflationary pressure gave policymakers some breathing space.

Despite the day's gains, investors maintained a cautious stance ahead of the U.S. presidential election in early November. A resurgence in global coronavirus cases also kept buying into risk-driven assets subdued.

"The coronavirus continues to spread at a fast pace, something that could result in stricter lockdowns and weigh further on the global economy. What’s more, with the U.S. election drawing closer, investors may refrain from engaging in large trading positions," Charalambos Pissouros, senior market analyst at JFD Group, wrote in a note.

Russia's rouble firmed ahead of three government bond auctions, while markets were also awaiting an interest rate decision from the central bank on Friday. Still, the currency lagged its EMEA peers after data highlighted weakness in the Russian economy.

Russians' real disposable income fell 4.8% in year-on-year terms in the third quarter, as the pandemic exacerbated living standards issues. Separate data showed the Russian economy contracted 3.3% in September.

In Asia, the Chinese yuan hit a more-than two-year high to the dollar after a strong midpoint fix by the central bank. For GRAPHIC on emerging market FX performance in 2020, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2020, see https://tmsnrt.rs/2OusNdX

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see (Reporting by Ambar Warrick in Bengaluru; Editing by Andrew Cawthorne)