Currencies gain as Turkish lira firms before rate decision
* Turkish central bank expected to keep rates unchanged
* Russia's rouble gains 0.5 percent, oil rises
* MSCI's EM stocks index hits six-week peak
* S.African rand firmer ahead of local retail sales data
By Aaron Saldanha
Jan 16 (Reuters) - Most emerging market currencies firmed
against the dollar on Wednesday, with Turkey's lira
strengthening ahead of a central bank rate decision, while
stocks in the developing world notched a six-week peak.
Turkey's central bank sets borrowing costs later in the day,
with a Reuters poll predicting the key rate will remain at a
formidable 24 percent despite moderating inflation.
The lira was 0.8 percent firmer after hitting its
strongest level against the dollar in more than a week.
Tim Ash, emerging markets senior sovereign strategist at
BlueBay Asset Management, said he did not think the bank would
be "that na´ve as to pre-emptively cut rates at this stage".
A diplomatic row with the United States, a spike in oil
prices to multi-year peaks and doubts investors had about the
central bank's independence hammered the lira in 2018. It ended
the year more than 28 percent weaker, its worst annual showing
in 17 years.
"Cutting too early would risk more carnage for the (lira),
and putting the currency back into the death spiral which
threatened back in the summer - meaning deeper recession, higher
inflation, and macro destabilisation," Ash said.
Neither the central bank nor Turkish President Tayyip
Erdogan's AKP party would want a repeat of those conditions in
the run-up to local elections, he added.
Turkish stocks were up half a percent, aided by
gains among financial shares. MSCI's index of emerging market
stocks rose 0.2 percent.
A half-percent rise in Russia's rouble was
underpinned by an increase in the price of oil, the
country's main export.
Gains in Russian stocks were tempered by a drop in
the Moscow-listed shares of Rusal after the U.S.
Senate voted to advance a resolution disapproving of a Trump
administration plan to ease sanctions on Russian firms tied to
oligarch Oleg Deripaska.
South Africa's rand was 0.6 percent firmer. Market
participants awaited local retail sales data for clues on the
health of Africa's most industrialised economy.
South African stocks edged 0.1 percent higher.
Following the parliamentary rejection of British Prime
Minister Theresa May's Brexit proposal, currencies softened in
central and eastern Europe – a region exposed to Brexit
ructions. Hungary's forint hit a more than one-month low against
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(Reporting by Aaron Saldanha in Bengaluru, Additional reporting
by Karin Strohecker in London; Editing by Dale Hudson)
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