* Forint set to add 2% this week
* Russian rouble comes off over 2-month high
* EM stocks edge higher, eye near 2% weekly gain
May 21 (Reuters) - Most emerging market currencies were
muted on Friday, although they were set to notch weekly gains as
fears over immediate policy tightening by the Federal Reserve
were abated by mixed U.S. employment data.
The MSCI's index of EM currencies
strengthened about 0.1%, and was poised to close slightly higher
this week. The dollar was headed for a weekly loss, as somewhat
hawkish signals from the minutes of the Fed's last meeting were
offset by data that tempered expectations for a rise in
employment growth this month.
The Fed has cited a labour market recovery as one of the key
factors for it to taper stimulus measures, and the other being
growing inflationary pressure. While inflation has accelerated
in recent months, it is still well below the Fed's upper limit.
Most currencies in Europe, the Middle East and Africa (EMEA)
slightly weakened. Russia's rouble weakened about 0.1%
after hitting 73.2064, its highest in more than two months, as
the country raised 1.5 billion euros ($1.83 billion) in two
eurobond issues on Thursday.
The rouble was set to add about 0.4% this week, as investors
welcomed dialogue between U.S. and Russian diplomats after
deteriorating relations earlier this year.
Hungary's forint weakened 0.1% to the euro,
but was the best performer this week among EMEA currencies with
a 2% climb against the U.S. dollar.
The currency had strengthened to a 1-1/2-year high after the
Hungarian central bank signalled an imminent hike in interest
rates to combat inflation.
"In Central Europe, we note a rather moderate surge in
producer prices, relative to a more persistent increase in
households' inflation expectations," Credit Suisse analysts
wrote in a recent note.
"The latter represents the main risks for long-term
financial stability ... we think the central banks in Central
Europe should begin policy normalization earlier."
Rising inflation expectations are a recurring trend among
markets this year, as more economies emerge from COVID-19
The South African rand weakened 0.2% after marking
its best day in two weeks on Thursday, as caution kicked in
ahead of a S&P credit rating review later in the day. The agency
currently rates South Africa's debt at BB-, three notches below
investment grade, with a "stable" outlook.
The rand was set to add 0.8% this week, after the country's
central bank held interest rates as expected and flagged
stronger economic growth.
Most stocks in EMEA rose, while the MSCI's index of EM
stocks gained 0.2%. The index was set to add nearly 2%
For GRAPHIC on emerging market FX performance in 2021, see http://tmsnrt.rs/2egbfVh
For GRAPHIC on MSCI emerging index performance in 2021, see https://tmsnrt.rs/2OusNdX
For TOP NEWS across emerging markets
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see
($1 = 0.8185 euros)
(Reporting by Ambar Warrick in Bengaluru, Editing by Sherry