EMERGING MARKETS-CEE FX hit by policy-easing bets, EM stocks dented by Fed rate concerns

The rupee was largely flat, while a poll showed that the currency will still be very close to its historic low in six months despite the central bank's frequent interventions, with a third of analysts forecasting a new low in a year. The MSCI stocks index slipped 0.7%, poised for its first weekly decline in three, dented by China's blue-chips and Hang Seng stocks.

Most emerging market stocks and currencies slipped on Thursday on worries that stubborn U.S. inflation could keep interest rates higher for longer, while Central and East European currencies fell on concerns over policy easing after Poland's surprise rate cut.

The MSCI currencies gauge shed 0.2% and was down for fourth day. It is poised for its worst week in more than a month on global growth worries and elevated U.S. rates after services sector unexpectedly gained steam in August. A Reuters poll showed EM currencies will struggle to reclaim lost ground this year, as high U.S. Treasury yields and safe-haven demand amid a slowing China economy keeps the dollar buoyant.

Meanwhile, Romania's leu, Czech Republic's crown and Hungary's forint slipped between 0.1% and 0.4% against the euro after Poland's shocking 75-basis-point rate cut on Wednesday. The zloty extended losses, down 0.5%.

"Poland's larger-than-expected rate cut and prospect of CEE central bank easing provide some cause for currency weakness in the regions, however short-term moves are being guided by dollar strength in risk-off trade," said Shaun Murison, senior market analyst at IG Markets. Meanwhile, data showed South Africa's second-quarter current account deficit widened to 2.3% of gross domestic product from first quarter's revised 0.9%.

The rand was down 0.1% against the greenback. Turkey jacked up its inflation forecasts and cut economic growth expectations on Wednesday, as President Tayyip Erdogan appeared to endorse the big rate hikes, driving a turnaround toward more orthodox policies.

The lira was at 26.84-per-dollar, while the stocks index gained 1.1%. The rupee was largely flat, while a poll showed that the currency will still be very close to its historic low in six months despite the central bank's frequent interventions, with a third of analysts forecasting a new low in a year.

The MSCI stocks index slipped 0.7%, poised for its first weekly decline in three, dented by China's blue-chips and Hang Seng stocks. Chip stocks fell 3.8% to log their largest drop in more than two months after a recent rally, while mainland property developers declined 2.8%, with Country Garden losing 12.3%.

Meanwhile, a better-than-expected trade data provided some cushion to weak sentiment around China's outlook. "We are looking for a lot more evidence that the measure are filtering into the economy, reducing property risk (and contagion into the financial sector) as well as translating into growth," Murison said.