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EMERGING MARKETS-Turkish lira sits out currencies rally

* Turkish central bank raises forex reserve requirements

* Hungarian inflation exceeds expectations

* Romanian central bank seen hiking rates by 50 basis points

Nov 9 (Reuters) - Emerging market currencies rose for the fourth straight session on Tuesday as the dollar stayed steady ahead of an inflation test, while Turkey’s lira underperformed with backdoor tightening doing little to support the beleaguered currency.

The lira slipped 0.5%, less than 1% away from all-time lows, compared with a 0.2% rise for the broader MSCI index of EM currencies.

Turkey’s central bank raised the reserve requirement ratios for forex deposits by 200 basis points. The move is seen raising required reserves by $4.6 bln as the bank tries to encourage holding the local currency.

But markets were less than impressed.

“They are implementing a monetary policy tightening to support the lira instead of raising benchmark rates, but the market is looking through this as the credibility of the Turkish central bank is not being really that strong,” said Jakob Christensen, head of EM research at Danske Bank.

In a surging inflation environment, the Turkish central bank cut rates by 300 basis points over the last couple of months due to increasing pressure by President Tayyip Erdogan, sending the currency tumbling.

Most other currencies firmed as the dollar held steady. Data on Wednesday is expected to show U.S. consumer prices galloped last month, which could raise speculation of a faster tightening despite assurances of patience by the Federal Reserve.

Higher rates in the U.S. reduces the attractiveness of high-yielding-but-risky EM currencies for foreign investors.

Chinese factory gate prices are also seen soaring in October, adding to pressures that rising inflation could dampen a nascent economic recovery.

Russian rouble erased initial sluggishness as oil prices rose. But gains were limited by an increase in the volume of foreign currency purchases by its finance ministry.

Most central and eastern European currencies gained against the euro with Hungary’s forint, the Czech crown and Poland’s zloty rising around 0.2%.

Data on Tuesday showed Hungarian headline inflation significantly exceeded analyst forecasts, raising bets that the banks may adopt a more hawkish stance, like its regional counterparts.

Romania’s central bank is seen hiking its interest rate by 50 basis points later in the day. Last week, the Czech National Bank hiked by 125 basis points, while Poland raised by 75 bps.

The Romanian leu was flat ahead of the decision.

EM stocks added 0.4%, but carnage in China’s property sector kept a check on sentiment.

Indebted and downgraded Kaisa Group said it needs help to pay investors, workers and suppliers. China’s real estate sector has been hit by a liquidity squeeze, exacerbated by the troubles of China Evergrande Group.

For GRAPHIC on emerging market FX performance in 2021, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2021, see tmsnrt.rs/2OusNdX

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For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see

Reporting by Shashank Nayar and Susan Mathew in Bengaluru; Editing by Shailesh Kuber

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