EMERGING MARKETS-Turkish lira hits record low, EM stocks track Wall St plunge

* Turkish lira slides for fifth straight session

* Hungarian forint eases as industrial output drops

* Russian rouble firms ahead of inflation data

* EM currencies set for second week of gains in a row

By Sagarika Jaisinghani

Sept 4 (Reuters) – The Turkish lira slipped to a record low on Friday on concerns around stubbornly high inflation, while emerging market stocks tumbled for a third straight session following a tech-fuelled plunge on Wall Street overnight.

The lira eased 0.1% against the dollar to an all-time low of 7.4541, weakening for the fifth session in a row with pressure growing on the central bank to continue tightening credit a day after data showed year-on-year inflation of 11.77%.

The currency has lost about 20% this year despite central bank intervention and, along with Hungary’s forint, is among Europe’s worst performing currencies. The forint was a touch lower at 359.53 a euro on Friday as data showed industrial output dropped by an annual 8.1% in July.

“Yesterday’s combination of risk-off in assets and a firm dollar triggered new lows for the lira and also saw EUR-HUF return close to the 360.00 mark, which is back inside the forint’s ‘corona cloud’,” said Tatha Ghose, FX analyst at Commerzbank.

“The underperformance of these currencies tells us about longer-term prospects: we think it is a template for which currencies would be vulnerable in a more sustained EM FX sell-off.”

Still, a Reuters poll showed the forint should gain the most among central Europe’s currencies over the next 12 months with a near 4% rise, as the region looks to return to an interrupted firming trend.

An index of emerging market currencies inched higher on Friday and was on course for its second straight week of gains due to earlier weakness in the dollar following the Federal Reserve’s new accommodative stance on inflation.

The Russian rouble firmed for a second consecutive session following a 2.6% slide on Wednesday as German Chancellor Angela Merkel said Kremlin critic Alexei Navalny was poisoned. Sources told Reuters the European Union was weighing new sanctions on Moscow over the poisoning.

In South Africa, the rand firmed 0.5%, but the return of nationwide electricity blackouts this week has kept the currency from making a major headway. State power utility Eskom said it would reduce power cuts on Friday due to lower demand and much improved weather.

The Czech crown eased 0.2% versus the euro even as data showed retail sales, excluding cars and motorcycles, rose by a faster-than-expected 3% in July.

A fall in Asian shares led a basket of emerging market stocks down 0.6%, setting it on course for its biggest weekly decline since April. Bourses in Turkey and Russia rose 0.5% and 0.2%, respectively, while the South African stock index was flat.

For GRAPHIC on emerging market FX performance in 2020, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2020, see tmsnrt.rs/2OusNdX

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For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see (Reporting by Sagarika Jaisinghani in Bengaluru; editing by Uttaresh.V)

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