(There will be no EMEA-focused emerging markets reports on Monday due to the May Day holiday in the UK and many European markets. Reuters will resume coverage on Tuesday)
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Polish flash CPI at 14.7% y/y in April, below expectations
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South African rand weaker ahead of budget, trade data
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China stocks close up ahead of record May Day holiday rush
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EM FX flat, stocks up 0.3%
By Bansari Mayur Kamdar
April 28 (Reuters) – Russia’s rouble inched higher in early trading on Friday, ahead of its central bank decision, headed for its third straight monthly fall as pressure mounted on the oil exporter’s currency from cheapening crude prices.
The rouble traded at 81.1275 against the dollar by 0907 GMT, strengthening from 81.3325 at Thursday’s close.
The Russian central bank is expected to hold rates at 7.5% at its decision later in the day, according to a Reuters poll, with the risk of inflationary pressure picking up limiting the bank’s room for monetary easing.
Month-end tax payments due ahead of the decision put a floor under the rouble this week but fears of recession and the impact of that on crude demand have added to downward pressure on the battered Russian currency.
Overall, the MSCI index for emerging market currencies was flat but set for its second weekly fall as the U.S. dollar rebounded this week with all eyes on the Federal Reserve’s rate decision next week.
“EM is not in the driver seat,” said Marek Drimal, lead CEEMEA strategist at Societe Generale.
“What happens over the next weeks with EM currencies and bonds really depends on how its impacted by the developments in developed markets and specifically what happens in the U.S. next week.”
The South African rand weakened 0.6% against a stronger dollar, ahead of the release of budget and trade data that could indicate the health of Africa’s most industrialised economy.
In central and eastern Europe, the Polish zloty slipped against the euro even as data showed consumer prices in Poland rose less than expected in April.
“You’ve got a very sharp slowdown in headline inflation happening now and expected for the rest of the year,” added Drimal.
“But core inflation, the measure of your demand driven pressures and inflation in the economy is not going to slow down to the target anytime soon.”
The Hungarian forint was flat but headed for weekly gains after retreating from a one-year peak last week when the central bank flagged it would narrow its rate corridor with a cut to the top rate – which it did on Tuesday.
The Turkish lira edged down after the central bank kept its policy rate at 8.5% on Thursday, as expected, and headed for a monthly loss as unorthodox rate cuts supported by President Tayyip Erdogan sparked a currency crisis.
Emerging market stocks gained 0.3%, but were still headed for a monthly loss amid weakness in heavyweight Chinese stocks after data raised concerns about an uneven recovery. Equities in China and Hong Kong, however, advanced with the world’s second largest economy expecting a record-high travel rush over the Labour Day holiday. (Reporting by Bansari Mayur Kamdar in Bengaluru)
