Dovish Fed bets support EM assets; lira at record low ahead of rate decision
Updated at 0845 GMT
Turkey rate decision due at 1100 GMT
South Africa leading indicator down 0.4% in June
Kenya top court suspends ruling on 2023 Finance Bill
By Lisa Pauline Mattackal
Aug 20 (Reuters) -Most emerging market stocks and currencies edged higher on Tuesday, as investors hoped for confirmation that the U.S. Federal Reserve would ease borrowing costs next month, while Turkey's lira fell ahead of an expected interest rate decision.
MSCI's emerging market stocks index .MSCIEF rose 0.3%, hovering at a more than one-month high, while an index tracking currencies .MILA00000CUS edged up 0.2% , building on record highs touched on Monday.
A weaker U.S. dollar =USD helped lift emerging market currencies, with the greenback hovering at its lowest since January.
Meanwhile, the Turkish lira TRYTOM=D3 touched a fresh record low for a fourth straight session, trading at 33.826 to the dollar ahead of a central bank rate decision at which policymakers are expected to keep rates on hold, despite recent data pointing to declining inflation.
"Turkey's TCMB will doubtless accompany its expected rate hold with a hawkish message, pointing to still elevated consumer inflation expectations, and the need for CPI (consumer price index) to fall significantly further," said Marc Ostwald, chief economist and global strategist at ADM Investor Services International.
Investors are keenly watching the Jackson Hole symposium in the U.S. later this week, where Federal Reserve Chairman Jerome Powell is likely to signal a rate cut at the Fed's September meeting, which would likely weaken the dollar and lift demand for higher-yielding emerging market assets.
A number of emerging market central banks also meet this week, with policymakers seeking to balance the need for economic growth with limiting inflation, even as broad dollar strength this year has weighed on local currencies.
China left its benchmark lending rates unchanged, as expected.
South Africa's rand ZAR= weakened after a 10-day winning streak, though remained around one-year highs, with the greenback rising 0.4% against the currency. South Africa's leading indicator for June ZALEAD=ECI slipped 0.4% on a monthly basis.
Among individual equity markets, Turkey's main index .XU100 rose 0.2%, Polish stocks .WIG20 slipped 0.9%, while South African stocks .JTOPI gained 0.4%. Indonesian stocks .IDX hit a record high earlier in the day.
The dollar rose 0.5% against Russia's rouble RUB=. The euro was broadly flat versus currencies in central Europe EURHUF=, EURCZK=, EURPLN=.
Elsewhere, Israel's shekel ILS= rose 0.3%, while its main stock index .TA125 rose nearly 1%. The U.S. Secretary of State said on Monday that Israel had accepted Washington's proposal to tackle disagreements blocking a ceasefire deal in Gaza with Hamas.
Kenya's Court of Appeal suspended a lower court's judgment that the 2023 finance law was unconstitutional.
HIGHLIGHTS:
** Latin American central banks face dilemma as FX weakness fuels inflation fears
** BHP's quick strike fix sets tone for labor talks amid copper rally
** China plans 'bigger, stronger' social security fund to aid ageing society
** Decision from Bank Indonesia, the Bank of Thailand and the Bank of Korea expected throughout the week.
For TOP NEWS across emerging markets nTOPEMRG
For CENTRAL EUROPE market report, see CEE/
For TURKISH market report, see .IS
For RUSSIAN market report, see RU/RUB
For GRAPHIC on emerging market FX performance in 2024 http://tmsnrt.rs/2egbfVh
For GRAPHIC on MSCI emerging index performance in 2024 https://tmsnrt.rs/2OusNdX
Reporting by Lisa Mattackal in Bengaluru; Editing by Alex Richardson
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