Emerging market stocks rise, FX firms ahead of Fed meet
* MSCI's EM stocks index hits 6-1/2 month peak
* Hopes of dovish Fed outlook on Wednesday aid sentiment
* Russian rouble, stocks supported by firmer oil prices
By Aaron Saldanha
March 19 (Reuters) - Emerging market stocks hit a six and a
half month peak on Tuesday and developing world currencies
firmed against a soft dollar on expectations the U.S. Federal
Reserve will strike a dovish stance at its meeting this week.
The two-day meeting starts later on Tuesday. Money markets
are pricing in a 99 percent probability of borrowing costs not
being altered on Wednesday. They were left unchanged at the
Fed's last rate-setting meeting in January.
Dovishness from the European Central Bank (ECB) and the Fed
is spurring emerging market sentiment as developing world
central banks have become less worried about accelerating
inflation, Vladimir Miklashevsky, senior economist and trading
desk strategist at Danske Bank, wrote in a note to clients.
"Given the recent change in monetary path from the ECB and
Fed and the intensifying hunt for higher yields, we became
slightly more bullish on emerging market FX," he said.
MSCI's index of developing world stocks rose 0.2
percent, gaining for a third straight day, while MSCI'S emerging
market currencies index ticked up 0.1 percent.
Russian equities were pushed up 0.2 percent, mainly
on a strong showing by energy stocks on rising oil prices
. The rouble firmed 0.2 percent.
The Russian central bank is due to take a decision on
borrowing costs on Friday, with markets pricing in a 87 percent
chance of rates remaining at 7.75 percent, according to
Refinitiv Eikon data.
The rouble has been a stand-out emerging market performer
with a 8.6 percent rise this year, helped by oil prices jumping
about 26 percent since the start of 2019.
Turkey's lira was on an even keel, while stocks
slipped away from a more than two week closing high
notched on Monday as losses among financials and industrials
sent the index 0.1 percent lower.
South Africa's rand was 0.3 percent firmer as it
largely recovered ground lost in the previous session. Local
stocks rose 0.4 percent, a gain which set them on track
for their highest closing level in nearly half a year.
In emerging Europe, Budapest-traded shares hit a
record high and were trading 0.7 percent higher on strength
Poland's zloty was little changed against the
euro. Data showed wages in the country's corporate sector rose
by an annual 7.6 percent in February, above analysts'
expectations of 7.2 percent.
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(Reporting by Aaron Saldanha in Bengaluru;
Editing by Alison Williams)
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