EM ZAR Slips ahead of GDP Data; Rate Hike Bets Buoy RUB


S.African economy likely slowed in Q1 Reuters poll

50 bps interest rate hike in Russia expected on Friday ING

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June 8 Reuters Frayed nerves ahead of U.S. inflation data later this week cast a shadow over emerging markets on Tuesday, with South Africas rand leading losses ahead of domestic economic growth data.

Against a stronger dollar, the rand fell 0.6, pulling further away from 28month highs. GDP numbers later in the morning are expected to show the South African economy slowed in the first quarter.

But the rand is still by far the best performing EM currency this year, up more than 8, helped in part by rising commodity prices.

Turkeys lira the years worst performing EM currency so far erased early losses to trade flat, while Russias rouble ticked up towards its highest in nearly three months, despite falling oil prices.

Russias central bank is seen hiking rates at its meeting on Friday for the third time in a row, by 25 or even 50 basis points, as data on Monday showed inflation remained well above target and showed little signs of slowing.

The higherthanexpected CPI trend combined with a rebound in consumer lending growth amid still weak deposit dynamics should reinforce the Central Bank of Russias resignation to exit the loose monetary stance sooner rather than later, said Dimitry Dolgin, chief Russia economist at ING.

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