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China's skidding factory sector taps brakes on economic
recovery
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Brazil's central bank holds interest rates
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GS cautious on Turkish bank stocks ahead of election
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Fall in inflation slower than expected - Turkish c.bank
governor
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EM currencies up 0.2%, stocks add 0.7%
By Bansari Mayur Kamdar May 4 (Reuters) - Emerging market currencies rose on Thursday, supported by a weaker dollar after the Federal Reserve opened its doors to a pause in rate hikes, while the Turkish lira was subdued after the country's central bank stuck to its 2023 inflation forecast. The MSCI's index for emerging market currencies rose 0.2% by 0825 GMT, after the Fed raised rates by a quarter of a percentage point on Wednesday in what may be its last in a historic series of hikes in the world's largest economy. Regional stocks added 0.7%. Hong Kong's Hang Seng Index gained 1.3%, helped by a 4.8% rally in banking stocks . The Hong Kong Monetary Authority raised its main policy rate, even as weakness in its pegged currency forced the city's de facto central bank to deplete banking system cash to 15-year lows. China's blue-chip CSI300 Index closed flat and the Shanghai Composite Index added 0.8% as trading resumed after the May Day holiday break. China's factory activity unexpectedly dipped in April, a private sector survey showed, due to softer domestic demand and suggesting the manufacturing sector is losing momentum amid a bumpy post-COVID recovery. Among emerging market currencies, the South African rand inched up 0.1% against the greenback, while Turkey's lira was flat. Turkey's inflation is falling at a slower rate than expected by the central bank, said Governor Sahap Kavcioglu, adding the central bank maintains Turkey's inflation forecast of 22.3% for 2023. "The lira is not trading at all on market dynamics and macroeconomics fundamentals," said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank. "Right now, it is really driven by very heavy FX interventions by the central bank of Turkey, even more so these days in order to manage a potentially higher selling pressure on the lira before the May 14 Presidential elections." Goldman Sachs said it was cautious on Turkish banks heading into the elections, with lenders more vulnerable than the country's other stocks to a potential post-vote rate hike following years of unorthodox monetary policy. Russia's rouble rose to a near one-month high at 79.03 against the dollar.
The Hungarian forint rose 0.5% against the euro, leading gains in central and eastern European currencies, while the Czech crown added 0.1% a day after the Czech National Bank voted 4-3 to keep the key policy rate at 7.00%. High borrowing costs threaten the Hungarian economy and risk a credit crunch, the economic development minister said, adding that inflation needed to fall so that interest rates can come down. In Latin America, Brazil's central bank on Wednesday held interest rates steady for a sixth consecutive policy meeting and said it was "less likely" to resume hikes. Elsewhere, the International Monetary Fund is preparing to discuss Pakistan's budget plans for the coming financial year, as part of a long-awaited bailout tranche from the lender for the cash-strapped country. (Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Subhranshu Sahu)
@BansariKamdar;))