April 13 (Reuters) – Emerging market currencies extended gains for a third straight session on Thursday as the dollar hit a two-month low after data showing cooling U.S. inflation raised bets of a pause in the U.S. Federal Reserve’s rate hike cycle.
The MSCI’s emerging market currencies index .MIEM00000CUS added 0.3% by 0859 GMT.
The dollar index =USD dipped to its lowest level since February after cooler-than-expected U.S. inflation data on Wednesday stoked expectations that the Federal Reserve’s monetary tightening is either already finished or will be by May.
South Africa’s rand ZAR= gained 0.8% ahead of an investment conference and gold production and mining production data due later in the day.
Stocks in South Africa .JTOPI rose 0.7%.
In central and eastern Europe, the Romanian leu EURRON= slipped 0.2% against the euro after data showed inflation rose 14.53% on the year in March, exceeding expectations of 14.2% year-on-year.
“This doesn’t change the bigger disinflationary picture as we expect an approximate 3pp drop in April inflation and single-digit inflation by September,” said Valentin Tataru, ING’s chief economist for Romania, in a note.
“The central bank should be on hold for the rest of the year.”
The Czech crown EURCZK= eased 0.2% against the euro.
Czech consumer prices rose by 15.0% on a yearly basis in March, easing from the previous month to hit the lowest rate since April 2022, official data showed.
“What continues to be the case across much of the world and that includes Europe, EM and otherwise is that a much larger chunk of inflation has persisted and stuck around for a lot longer than people expected, and that should have people worrying a little bit,” said Will Hobbs, chief investment officer at Barclays Wealth.
The Russian rouble RUBUTSTN=MCX steadied near 82 to the dollar. Overnight, data showed annual inflation in Russia dropped below the central bank’s 4% target in March for the first time in a year.
The MSCI EM stocks index .MSCIEF edged up 0.2%, while China’s CSI300 index .CSI300 and Shanghai’s stock index .SSEC closed lower.
Chinese tech stocks slid after the Financial Times reported SoftBank was selling down its Alibaba 9988.HK stake, on the heels of Netherlands investor Prosus flagging some selling of its Tencent stake on Wednesday.
Later in the day, investors will be looking out for an interest rate decision in Peru and minutes from the Mexican central bank’s March monetary policy meeting.
(Reporting by Shashwat Chauhan and Bansari Mayur Kamdar in Bengaluru; Editing by Christina Fincher)
