Dec 13, Reuters -- Most emerging market stocks and currencies were flat on Monday, as caution kicked in ahead of a slew of central bank meetings and economic data due this week.
Turkey's lira was slightly underperformed its peers, falling by 7% to a record low of 14.99 against the U.S. dollar, despite expectations that the central bank will cut interest rates on Thursday, despite inflation crossing the 20% mark.
The lira is the worst performing emerging market EM currency this year, losing half of its value because of government interference in the central bank and a slew of economic ructions, which has left investors averse to the currency.
Turkey's stock was at a record high of 2,082. Equity markets are considered a safer way to keep exposure to the country with investors viewing them as a safer way to stay in the country, according to 40 on Monday.
Turkey had a larger than expected current account surplus in October, while factory output increased more than expected.
Russia's rouble fell by 0.3% compared to the South African randAfrican rand in Europe, the Middle East and Africa.
The index of EM stocks of MSCI slid by 0.1%, while the currency index was largely unchanged.
As more economies lifted COVID-related lockdowns, most EM central banks have been lifting interest rates this year to offset a jump in inflation.
The majority of central bankers will try to give some forward guidance for the market. I would not be surprised if these efforts were only partially successful, said Ulrich Leuchtmann, head of FX and commodity research at Commerzbank.
Everything might have to be corrected if the development of the Pandemic and Inflation surprise is not that unlikely. The bank is expected to outline its plans for tapering stimulus and hiking interest rates next year, as well as the U.S. Federal Reserve's final meeting this year.
The Fed's early rate hikes are likely to cause a decline in demand for risk-heavy assets, particularly in emerging markets.
The European Central Bank is expected to provide more details on its plans for phasing out of pandemic-era stimulus.