Currencies bounce against wobbly dollar, stocks hit one-week high

Dec 22 (Reuters) - Most major emerging market currencies

rose against the dollar and stocks hit a one-week high, while

Turkey's lira was little changed ahead of its central bank seen

keeping policy rate unchanged. The dollar index weakened after data showed U.S.

consumer confidence rose to an eight-month high in December as

the labour market remained strong, adding a new shine to riskier

emerging market assets. High-yielding favourites including South Africa's rand

and Mexico's peso firmed about 0.4% each, as

markets count down days till the year end amid thinning volumes. The MSCI's index for EM currencies was a

touch higher on Thursday, but down 4.6% for the year as tighter

monetary conditions across the world made it harder to borrow

money and hawkish messages from the U.S. Federal Reserve kept

the greenback in favour. Still, not all developing market currencies were equally hit

as most Latin American units benefited from their exposure to

commodities as prices of oil, base and precious metals surged

for better part of 2022. The MSCI's index for Latam FX

is up 15.6% this year, its first rise in three

years. Emerging market stocks enjoyed a bounce, last up

1.1% amid broader improvement in risk appetite. Turkish stocks

added 1%, while Russian equities gained 0.7%. Developing world assets have also been hit this year by

worries of a slowdown in China as it now embarks on less

restrictive COVID policies amid inadequate vaccinations. "The decline in U.S. interest rates and mushrooming global

economy tied to China provided tailwinds helping propel EM debt

and equities, but this has been working in reverse in

2022–tailwinds are now headwinds," said Peter Marber, head of

emerging markets at Aperture Investors. But Marber argues, EM debt, equities and currencies have

cheapened dramatically in 2022, offering investors an

opportunity to beef up exposure at bargain prices. The Turkish central bank is expected to keep its benchmark

lending rate at 9% later in the day after it said last month

that it decided to end the easing cycle, having managed to cut

rates to match with President Tayyip Erdogan's call for

single-digit rates. The lira was flat. Russia's rouble fell to its weakest since

late April 72 against the dollar on mounting fears over the

impact of sanctions on Russian oil and gas. The currency is on

track to fall more than 15% this month.

For GRAPHIC on emerging market FX performance in 2022, see URL

For GRAPHIC on MSCI emerging index performance in 2022, see URL For TOP NEWS across emerging markets For CENTRAL EUROPE market report, see For TURKISH market report, see For RUSSIAN market report, see

(Reporting by Shreyashi Sanyal in Bengaluru; Editing by

Shailesh Kuber)