LONDON: The Turkish lira hovered close to record lows on Friday, hurt by investors' fears of political interference in monetary policy and by general jitters about emerging markets which face headwinds from a resurgent dollar.
US jobs data later in the day is expected to show an increase in payrolls and a fall in the jobless rate, which could signal the Federal Reserve will start raising interest rates by mid-year.
Emerging Europe drew some support from the European Central Bank's announcement that it would start printing money from next week.
But with the dollar near 11-year highs, and Chinese growth slowing, most emerging assets remain under pressure.
While MSCI's main emerging equity index edged up, snapping a six-day losing streak, Chinese stocks fell, closing the week more than 2 percent lower.
In Turkey, President Tayyip Erdogan's strident criticism of the central bank's monetary policy has unnerved investors who fear lira weakness will boost inflation further. The lira slipped 0.2 percent and is down 10 percent this year.
Turkey's still-large current account deficit makes it vulnerable to any fall in US investment flows to emerging markets, said Luis Costa, head of CEEMEA debt and FX at Citi.
"Lira is not only suffering because of Erdogan's continuous criticism of monetary policy. (It) sells off because the current account gap still translates into a sizeable daily financing need," Costa said. "Heavy reliance on short-term dollar borrowing makes this balance of payments very volatile. As usual, currency is the first channel to absorb the shocks."
Turkish stocks have also suffered this week because of Citi's decision to sell a stake in local Akbank.
The rise in oil prices to $61 a barrel and relative calm in eastern Ukraine boosted the rouble by almost 2 percent while dollar-denominated Moscow stocks rose 1.4 percent.
The rouble is up almost 4 percent against the dollar and around 6 percent against the euro this week and is now at its highest level of 2015.
Russian dollar debt also rose, with the 2043 bond up 4 cents and yield spreads over Treasuries narrowing 18 basis points to 483 bps, a three-month low.
Eastern Europe was buoyed by expectations of fresh ECB-fuelled flows. The Polish zloty hit eight-month highs versus the euro while Hungarian stocks jumped 1.5 percent and the forint rose 0.6 percent after data showed 3.4 percent annual economic growth in the last quarter of 2014.
Per Hammarlund, an analyst at SEB, said Poland's resolve not to cut rates below 1.5 percent was benefiting the zloty. "(1.5 percent) is still much better than you are getting in the euro so the zloty has jumped on that news and you see that this morning too," he said.
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