Emerging Markets – Corporate Lira After Historic Slip, Other Emerging Market Currencies Follow With Dollar Stall

* Emerging market stocks attempt to snap up a 5-day losing streak

The currencies of Hungary and Poland rise against the euro

* More investors nervous about EM – HSBC poll

* South Korea and Hungary have recorded a record rise in daily COVID-19 cases

Written by Susan Matthew

Nov 24 (Reuters) – Emerging market stocks looked set to suffer a five-day loss on Wednesday, but a drop in internet and real estate stocks in China capped gains, while the Turkish lira firmed 3% after plunging 11% during the last session. Amid fears of more policies. slips.

The Turkish lira fell to 13.45 to the dollar for the first time on Tuesday, and rose 3% to 12.3, although it remains in record low territory.

The drop, which drove 2021 drops to 40%, was driven by interest rate cuts demanded by President Recep Tayyip Erdogan and signs of more to come, despite rising inflation.

Public anger with the government escalated, and there was a rush to convert lira income into foreign currencies. The central bank said on Tuesday that it can only intervene in the markets under certain conditions of excessive volatility.

“Any attempt to intervene in the currency markets will pass through meager (central bank) reserves within days,” Commerzbank EM and FX analyst Tatha Ghose said.

ÔÇťOther soft capital controls are unlikely to help – this is because the devaluation pressure of the lira appears to be fundamental – based on the market’s ‘forward-looking’ view of how negative real interest rates will arrive in Turkey in the medium term.”

Goldman Sachs said on Tuesday it now expects Turkey’s central bank to raise interest rates to 20 percent in the second quarter of next year.

Other emerging market currencies also strengthened as the dollar paused after a rally spurred by increased bets for faster monetary policy tightening by the Federal Reserve.

An HSBC survey showed that more than one in four investors feel “bearish” about emerging markets, as slowing economic growth and the specter of tighter monetary policy in the United States hamper expectations. HSBC said emerging market stocks are now trading at their deepest discount in developed markets since 2004.

After falling beyond 75 against the dollar on Tuesday, the Russian ruble gained about 0.2% as investors closely watched comments and developments about Moscow’s military build-up near Ukraine.

The currencies of Poland and Hungary jumped against the euro by about 0.7% each. The European Union has said it stands in solidarity with Poland, Lithuania and Latvia, amid a migrant crisis with neighboring Belarus.

Most developing market shares gained with shares in Europe, Middle East and Africa jumping between 0.2% and 1.8%. Stimulus promises recovery in mainland China stocks.

But some declines in Asia, including Chinese tech and real estate heavyweights, kept MSCI’s broader index of emerging market stocks flat.

A surge in COVID-19 cases weighed on sentiment, with Hungary reporting a record rise in daily cases as did South Korea.

For a GRAPHIC on the performance of emerging market FX in 2021 see http://tmsnrt.rs/2egbfVh For a GRAPHIC on the performance of the MSCI Emerging Index in 2021 see https://tmsnrt.rs/2OusNdX

For the most important news across emerging markets

For the Central Europe market report, see

For the Turkish market report, see

For the Russian market report, see

(Reporting by Susan Mathew in Bengaluru; Editing by Simon Cameron Moore)

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