EMERGING MARKETS-EMEA FX muted, Turkey's lira set for bumper week

* Lira set for best week since early-2001

* EM debt sees strong weekly inflows- Morgan Stanley

* U.S. election, vaccine boost ebbs out of markets

Nov 13 (Reuters) – Turkey’s lira was set for its best week in more than 19 years on expectations of an interest rate hike, while most other emerging market currencies fell on Friday as optimism over a coronavirus vaccine waned in the face of continued economic duress.

The lira has rallied about 11% since hitting a record low last Friday as a major shake-up in Turkey’s economic leadership pointed to immediate measures to support the currency.

The currency rose about 0.5% to the dollar, outperforming most of its peers in Europe, Middle East and Africa for the day amid uncertainty over the availability of a coronavirus vaccine and fears of further economic damage from surging COVID-19 cases.

Still, analysts were sceptical of the implications of recent changes in Turkey’s central bank administration for the institution’s independence from government influence.

A second wave of the pandemic in the United States and Europe dampened optimism over Pfizer Inc’s vaccine trial data and prospects of stabler U.S. policy after Joe Biden’s presidential win, setting up most EMEA currencies for muted weekly movements.

“Market sentiment is bobbing about amid the cross currents in global financial markets, with investors awaiting the next tailwind that could push them significantly into riskier waters,” said Han Tan, Market Analyst at FXTM.

“Monday’s post-U.S. election cheer and vaccine optimism have clearly ebbed with market participants now facing a tame end to a volatile trading week.”

Russia’s rouble fell about 0.3%, and was set to lose slightly for the week after data on Thursday showed Russia’s economy contracted 3.6% year-on-year in the third quarter.

While the reading was far better than expected, it still underlined the economic pressure faced by Russia, given that new infections have been surging at record rates in the country.

The Polish zloty was unchanged after data showed third-quarter GDP contracted slightly lesser than expected.

Emerging market stocks fared slightly better for the week, with the MSCI’s index of equities in the space set to add about 0.8%. The index was also a touch higher on Friday.

Emerging market debt was the biggest beneficiary of increased risk appetite, with emerging market-dedicated debt funds seeing inflows of up to $2.55 billion, according to Morgan Stanley.

For GRAPHIC on emerging market FX performance in 2020, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2020, see tmsnrt.rs/2OusNdX

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see

Source: Read Full Article