* FX down 0.4% this week; stocks off 2%
* US CPI data due 1230 GMT
* Lira extends selloff, last at 15.3 to the dollar
* Malaysia c.bank unexpectedly raises rates
By Anisha Sircar
May 11 (Reuters) – Emerging market currencies rose from 18-month lows on Wednesday amid a slight uptick in risk sentiment ahead of a closely watched US inflation data, while the Turkish lira slipped for a fifth straight day and headed towards December lows.
MSCI’s index of EM currencies ticked up 0.1% after plunging to its weakest level since November 2020 at the beginning of the week, as risky EM assets began losing their appeal on the heels of tightening US monetary policy and a stronger dollar.
Investors’ focus is now on April US consumer price index print, due at 1230 GMT on Wednesday, for clues on how aggressively the Federal Reserve will raise rates, with analysts expecting a sharp pullback in monthly growth.
The dollar slipped slightly to 103.81, but held near two-decade highs of 104.49 hit at the start of the week.
“Since the start of April, the currency market has been a one-way street in favor of the dollar – dollar bulls need a recharge at current levels, supporting the demand for EM currencies,” said Alex Kuptsikevich, a senior financial analyst at FxPro .
The market sees the slight slippage of the dollar and the fall of US Treasury yields as an opportunity for a local correction, which could indeed become a long-term trend, Kuptsikevich added.
Stocks rose 0.4% to snap a seven-day losing streak, tracking broadly higher global shares.
Sentiment this week has remained pressured amid uncertainty around central bank actions, Russia’s war on Ukraine, inflation concerns and worries about demand from China as it tightened COVID-19 restrictions.
On Wednesday, however, China stocks rose nearly 2% as official data showed lower domestic COVID-19 infections and higher April producer prices left room for more stimulus.
Meanwhile, Turkey’s lira extended declines to a fifth consecutive day, down 0.7% to trade at 15.3, closer to its record low of 18.4 in December 2021 during a currency crisis.
The lira has lost 13% so far this year after slumping 44% in 2021.
Elsewhere, Malaysia’s ringgit gained 0.1% after its central bank unexpectedly raised the benchmark interest rate to 2% from a record low of 1.75, as rising commodity prices, strained supply chains and strong demand conditions fanned inflationary pressures.
For GRAPHIC on emerging market FX performance in 2022, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2022, see https://tmsnrt.rs/2OusNdX
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For CENTRAL EUROPE market report, see
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For RUSSIAN market report, see (Reporting by Anisha Sircar in Bengaluru; editing by Uttaresh.V)