* EM stocks drop 10% from Feb highs to hit correction
* Time for raising interest rates has come closer - Czech
* Polish inflation jumps, GDP shrinks in first quarter
May 14 (Reuters) - Most emerging market currencies gained on
Friday, helped by a calmer dollar and easing Treasury yields as
comments from Federal Reserve officials soothed concerns over
immediate policy tightening, while stocks were set for their
worst week since February.
MSCI's index of emerging market currencies
gained 0.2%, but was set to snap a five-week winning streak,
while stocks were set to drop nearly 3.5% this week
and more than 10% from their February peak, hitting correction
Most emerging market assets were set to drop for the week
after data on Wednesday showed U.S. inflation in April gained
the most in nearly 12 years, intensifying concerns of tighter
However, those concerns eased after Federal Reserve Governor
Christopher Waller said on Thursday the Fed would not raise
rates until it sees inflation above target for a long time, or
excessively high inflation.
The dollar and benchmark Treasury yields
trended lower after Waller's comments, but were set to gain for
Still, inflation fears continue to grip emerging markets,
with economists forecasting further spikes this year as
commodity, food and input prices rise due to the lingering
effects of the COVID-19 pandemic.
"A range of factors is conspiring to push up global
inflation, including base effects, rising commodity prices
(food, metals and oil), supply-side bottlenecks, and pent-up
demand in some sectors," said Luiz Eduardo Peixoto, an economist
at BNP Paribas.
"In EM, we suspect inflation could prove a bigger issue in
coming months than many seem ready for and we have increased our
inflation projections across the board in all EM regions."
The Turkish lira and Russian rouble gained
0.4% and 0.1% respectively, while the South African rand
Most central European currencies including the Hungarian
forint, Polish zloty and Czech crown
rose between 0.1% and 0.4% ahead of key economic data
and central bank commentary.
The crown edged 0.3% higher after members of the Czech
central bank's 7-strong board agreed the time for raising
interest rates has come much closer, while the country's current
account showed a lower-than-expected surplus in
Poland's zloty edged higher after its inflation jumped to
4.3% in April from a year ago, while its GDP shrank by 1.2% in
the first quarter, above analyst forecasts.
Calculations from BofA showed that emerging market equity
funds attracted $3.9 billion in the week to Wednesday, their
largest inflows in the past four weeks, while debt funds took
in $1.2 billion in a sixth straight week of inflows.
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
(Reporting by Shashank Nayar in Bengaluru; Editing by Toby