Turkey's lira eased on Friday but was still headed for a second straight week of gains after the central bank hiked its policy rate and vowed to remain tough on inflation, while South Africa's rand held steady ahead of credit rating reviews.

The lira fell 0.6pc to 7.5959 against the dollar by 0858 GMT, as profit-taking emerged a day after the currency leaped to a near two-month high. For the week, the currency was set to record gains of nearly 1pc after rallying 11pc last week.

Turkey's central bank met market expectations on Thursday by raising its key interest rates by 475 basis points to 15pc and pledged to sustain monetary tightening until a "permanent fall" in inflation was achieved.

The rate hike, the sharpest in more than two years, could stall the economy's recovery from the coronavirus pandemic but could also support the lira after it plunged to record lows this year on worries about dwindling forex reserves and inflation that is stuck in double-digits.

"I expect the lira now to not rally so much but to stabilize in the 7.50 to 7.60 range against the dollar for the next few months... for someone looking for a bit of carry the lira still remains very attractive," said Per Hammarlund, chief emerging markets strategist at SEB.

South Africa's rand wavered between flat and negative territory ahead of expected credit rating reviews by Moody's and S&P later in the day.

Analysts at RBC Europe cautioned against the risk of a Moody's downgrade after comments by the credit rating agency on South Africa's finance Minister Tito Mboweni's budget speech last month.

Moody's had warned South Africa's budget lacked detail on how and when the government will implement policies to boost economic growth, and so public debt would likely continue to increase for years.

Russia's rouble strengthened 0.4pc, in line with strength in global crude prices, the country's top export.

Emerging market stocks also fared slightly better, with MSCI's index of equities in the space up 0.4pc.

BofA said on Friday inflows into global stocks in the last two weeks soared to $71.4 billion, led by U.S. and emerging market stocks as encouraging COVID-19 vaccine developments led to euphoric buying of shares.

In central Europe, Budapest stocks jumped more than 1pc after Hungary's prime minister said a dispute over the European Union's recovery fund and budget would eventually be resolved.