A gauge of emerging market currencies came under pressure on Wednesday as the US dollar resumed its charge upwards, while Polands zloty slipped in the lead up to an interest rate verdict later in the week.
Yesterday morning early, MSCIs index for emerging market currencies had shed 0.2%, set to snap a five-day winning streak.
Most currencies in Central Eastern Europe traded in a tight range owing to a lack of catalysts, with Hungarys forint slipping 0.2% against the euro, while the Czech crown also lost 0.2%.
Polands zloty lost 0.4% against the euro ahead of a central bank rate decision on Thursday, where it is widely expected to hold rates steady at 5.75%.
South Africas rand slipped 0.5% against the dollar as the greenback firmed, while Israels shekel also shed 0.5% after rising over 1% in the previous session.
A broader gauge of emerging markets stocks also dipped 0.3%, on track to log its first single-day decline in five, following a near 1% fall in emerging market heavyweights China and Hong Kong.
Risk assets have rallied recently while the dollar has been pinned lower amid lingering hopes the US Federal Reserve would cut interest rates sometimes this year, following a soft jobs report last week.
Risky assets have retraced the sell-off in recent days and are not far from the highs seen a couple of weeks ago. We are still in the bullish camp for risky assets, said Mohit Kumar, chief economist Europe at Jefferies.
A positive economic backdrop and central bank put on the table creates a positive environment for risky assets.
Investor focus would shift to unemployment data in Czech Republic and Trkiye, along with an inflation reading in Hungary this the week.
