EMERGING MARKETS – Lira beats c.bank decision; Hungarian stocks fall

Band Bansari Mayur Kamdar

May 26 (Reuters)Emerging market currencies fell on Thursday, with the Turkish lira extending its losses ahead of a central bank rate decision, while blue-chip Hungarian stocks fell on the government’s plan for windfall ‘additional profits’ taxes companies.

Read it TRY= dipped slightly ahead of a central bank decision at 11:00 GMT where it is expected to keep its benchmark rate at 14% despite soaring inflation, depleted foreign exchange reserves and a prolonged decline in the currency.

“Inflation erodes their competitiveness,” said Jakob Christensen, chief analyst at Danske Bank.

“They are playing with fire doing this and we are getting more and more nervous about the lira weakening from here. change.”

The Russian Ruble RUBUTSTN=MCX fell 2.6% against the dollar after the central bank cut its key interest rate to 11% from 14% in an off-schedule meeting and said it saw room for further further cuts this year, as inflation slows from more than 20-year highs and the economy is set to contract. UK/RUB

“The central bank’s decision to lower it to 11% may be a bit premature, but overall, given that inflation is falling quite quickly, I’m not surprised the market isn’t too alarmed about it,” Christensen said.

Emerging market currencies .MIEM00000CUS slipped 0.2% and fell 2.6% so far this year on fears of aggressive monetary policy tightening by the US Federal Reserve, a stronger dollar and a soaring oil and food prices, especially for countries highly dependent on imported raw materials.

Shares .MSCIEF down 0.1%.

In Central Europe, Hungarian equities .BUX fell nearly 5% after Budapest said it would impose windfall taxes on “extra profits” from banks and corporations to make up for a budget shortfall.

The Hungarian Forint EURHUF= fell 0.5% against the euro, leading declines among its regional peers.

The South African Rand ZAR= fell slightly after Wednesday’s minutes from the Fed’s latest meeting signaled that the world’s most influential central bank was likely to stay the course on interest rate hikes.

The Chinese Yuan CNY=CFXS weakened past a key threshold of 6.7 to the dollar, under pressure from investors worried about a prolonged economic slowdown after Premier Li Keqiang held a rare high-level meeting to support the economy. CNY/

For 2022 Emerging Markets FX Performance CHART see http://tmsnrt.rs/2egbfVh

For the GRAPH on the performance of the MSCI emerging index in 2022, see https://tmsnrt.rs/2OusNdX

For TOP NEWS in emerging markets

For the CENTRAL EUROPE market report, see EEC/

For the TURKISH market report, see .IS

For the RUSSIAN market report, see UK/RUB

(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Kim Coghill)

(([email protected]; Twitter: https://twitter.com/bansarikamdar;))

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Laura T. Thrasher