EMERGING MARKETS-Turkish lira, Mexican peso at multi-week highs as dollar fades post-Fed

By Karin Strohecker
    LONDON, Feb 2 The Turkish lira and the Mexican
peso surged to multi-week highs  on Thursday, leading emerging
markets which took heart from a weaker dollar after the U.S.
Federal Reserve gave no hint of accelerating rate hikes.
    The greenback slipped to an 11-week low against a basket of
currencies after the Fed held interest rates on Wednesday in its
first meeting since President Donald Trump took office. While
painting a fairly upbeat picture of the economy, it gave no 
firm signal on the timing of its next rate move. 
 
    The peso strengthened nearly 1 percent to hit its
strongest level in six weeks while South Africa's rand 
added 0.6 percent. 
    The lira meanwhile rose as much as 1.5 percent to hit
a three-week high, its fourth straight day of gains after
suffering the worst January in almost a quarter of a century.
 
    "One (factor) is the broad-based weakness of the dollar -
this is something we are seeing across the market," said Murat
Toprak, FX strategist at HSBC. 
    Toprak said markets had started to unwind some of the
extreme lira short positions of recent days.
    "Also, the liquidity tightening policy of the Turkish
central bank is starting to produce some effects, with the
average cost of funding of banks above 10 percent providing
support for the lira," said Toprak, who nonetheless remains
"cautious" on the currency. 
    The lira and the peso - both among the worst performing
emerging market currencies this year - have been lightning rods
for emerging market investors' angst over Trump's policy
direction. tmsnrt.rs/2e7eoml
    Russia's rouble strengthened 0.7 percent, supported
by rising oil prices, ahead of a central bank meeting on
Friday - the first since policy makers introduced a
dollar-buying programme last week.  
    The new budget rule starting in February is aimed at
shielding the economy from oil price swings and replenishing
reserves. The International Monetary Fund has welcomed the new
budget rule. 
    Emerging stocks rose 0.3 percent, edging closer to
the near-three month high hit in mid-January with bourses in
Moscow, Turkey and emerging Europe  
 lifting the index. 
    Investors were also awaiting the outcome of a policy meeting
at the Czech central bank. Analysts expect the bank will remove
its cap on currency strength in the second quarter of the year
and have been piling into crown assets, even though the bank has
said it would not rush into the move.
            
For GRAPHIC on emerging market FX performance 2016, see tmsnrt.rs/2e7eoml

For GRAPHIC on MSCI emerging index performance 2016, see tmsnrt.rs/2dZbdP5
    
    For CENTRAL EUROPE market report, see 
    For TURKISH market report, see 
    For RUSSIAN market report, see )
     Emerging Markets Prices from Reuters            
 Equities                  Latest    Net Chg  % Chg  % Chg      
     
                                                     on year    
       
 Morgan Stanley               
 Emrg Mkt Indx    915.92    +2.92   +0.32   +6.22     
       
 Czech Rep            941.07    +2.84   +0.30   +2.11     
       
 Poland           2069.97    -9.13   -0.44   +6.27     
       
 Hungary           32646.18   +62.00   +0.19   +2.01     
       
 Romania           7516.99   -10.95   -0.15   +6.10     
       
 Greece              623.77    +4.72   +0.76   -3.09     
       
 Russia            1179.24   +11.71   +1.00   +2.34     
       
 South Africa    45891.13  -321.70   -0.70   +4.53     
       
 Turkey          86979.79  +131.82   +0.15  +11.31     
       
 China             3159.17    +9.61   +0.31   +1.79     
       
 India           28215.88   +74.24   +0.26   +5.97     
       
            
 Currencies              Latest    Prev    Local    Local       
      
                                   close   currency currency    
       
                                           % change % change    
       
                                                    in 2017     
      
 Czech Rep      27.02     27.01   -0.05    -0.04      
     
 Poland          4.31      4.30   -0.06    +2.27      
     
 Hungary       308.30    309.10   +0.26    +0.17      
     
 Romania         4.53      4.54   +0.32    +0.17      
     
 Serbia        123.93    123.98   +0.04    -0.47      
     
 Russia            59.67     60.05   +0.64    +2.67      
     
 Kazakhstan       325.20    324.71   -0.15    +2.60      
     
 Ukraine           26.98     26.85   -0.46    +0.09      
     
 South Africa      13.38     13.46   +0.62    +2.65      
     
 Kenya            103.70    103.80   +0.10    -1.28      
     
 Israel             3.76      3.77   +0.19    +2.33      
     
 Turkey             3.73      3.77   +1.00    -5.50      
     
 China              6.88      6.88   +0.00    +0.96      
     
 India             67.41     67.40   -0.02    +0.79      
     
 Brazil             3.13      3.13   -0.00    +3.99      
     
 Mexico            20.54     20.70   +0.78    +0.84      
     
            
 Debt                 Index   Strip Spd  Chg   %Rtn   Index     
       
 Sov'gn Debt  EMBIG   348         0    .07  7 50.76 1   
        
            
 All data taken from Reuters at 10:15 GMT.            
 Currency percent change calculated from the daily U.S.         
  
 close at 2130 GMT.            


 (Additional reporting by Claire Milhench; editing by Richard
Lough)