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Polish cbank expected hold interest rates
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EMFX index steadies as dollar near two-month low
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South Korea, India, Hungary push EM stocks higher
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Russian rouble near one-year low against dollar, euro
By Shashwat Chauhan April 5 (Reuters) - Emerging market stocks rose on Wednesday after two sessions of declines and currencies steadied as U.S. recession fears pushed the dollar lower, with the Polish zloty flat ahead of a central bank decision on interest rates. The MSCI's index for emerging market stocks gained 0.2%, with Asian markets including South Korea and India leading gains, while Hungary's Budapest SE index rose 0.8% to a four week high.
Developing world currencies steadied, with MSCI's index up 0.1%, as the dollar was pinned near two-month lows after weak U.S. economic data, including signs of cooling in the labour market, bolstered views that the Federal Reserve is near the end of its interest rate tightening saga.
Most emerging market currencies are forecast to drift higher in 2023 as investors fret less about financial stability and snap up riskier assets, according to a Reuters poll of analysts. South Africa's rand rose 0.3% after two days of declines as gold prices rallied. A survey showed South African private sector economic activity contracted in March, dropping below the 50 mark dividing growth from contraction. South Africa's stock index fell 0.7%. The Russian rouble touched a near one-year low against the dollar and the euro, hampered by lower foreign exchange supply and capital outflows amid limited liquidity. Russia's rouble-based MOEX Russian stock index gained for the third straight day as oil prices continued their strong run after a surprise OPEC+ production cut on Sunday boosted prices. The Polish zloty held steady against the euro amid expectations that the National Bank of Poland will hold rates at 6.75%. The meeting comes after central banks in Hungary and the Czech Republic remained hawkish in their recent meetings.
"What will be decisive for the zloty is whether the dovish majority will decide to declare the end of the rate hike cycle at this stage," Antje Praefcke, FX analyst at Commerzbank wrote in a note.
"However, in view of continued high price pressure it is likely to be too early for that at this stage even for the doves."
Chilean assets will be eyed after the country's central bank kept its benchmark interest rate unchanged at 11.25% on Tuesday. Pakistan's rupee hit a record low of 288.25 against the dollar as the cash-strapped country grapples with sky-high inflation and political turmoil. On Tuesday, the World Bank sharply lowered Pakistan's current year growth forecast.
Markets in China, Hong Kong, Taiwan and Israel were shut on Wednesday.
For GRAPHIC on emerging market FX performance in 2023, see For GRAPHIC on MSCI emerging index performance in 2023, see For TOP NEWS across emerging markets For CENTRAL EUROPE market report, see For TURKISH market report, see For RUSSIAN market report, see (Reporting by Shashwat Chauhan and Shreyashi Sanyal in Bengaluru; Editing by Muralikumar Anantharaman)
