* Polish tariff decision: should remain pending
* The Brazilian bank prepares a rate hike of 75 basis points
* Emerging equities down for the 4th day after the fall of Wall St
May 5 (Reuters) – Most emerging market currencies eased against a stronger dollar on Wednesday as hints of a potential rise in U.S. interest rates weighed on high-yield assets, while investors envisioned a continued rise in coronavirus infections in a number of major markets.
In India, where cases and the number of deaths from COVID-19 have skyrocketed over the past month, banks have pulled the Mumbai stock market up after the central bank rolled out measures to support the economy, including more debt moratoriums.
The Chinese yuan fell 0.1% after reports that G7 members aimed to take a tougher line against China’s forced use of labor in its northwestern province of Xinjiang .
Unlike India and other developing countries still grappling with the pandemic, the U.S. economy quickly took over to operate at full capacity, and Treasury Secretary Janet Yellen said on Tuesday that rate hikes could be necessary to avoid overheating and to assuage future inflationary pressures.
“(There are) concerns on the part of many market participants … that inflation may not only rise temporarily but permanently,” said Esther Reichelt, analyst at Commerzbank.
“This could force the Fed to normalize its monetary policy faster than it currently expects.”
The MSCI emerging market currency and equity indices fell for the fourth consecutive session, also weighed down by a rise in coronavirus infections in Thailand and Taiwan, one of the index’s biggest weights along with China and Korea from South.
The South African rand remained stable after private sector activity grew at its strongest rate in nine years in April, but the outlook for a higher U.S. interest rate regime has tarnished the attractiveness of high-yielding assets like the rand.
Investors are now awaiting key policy rate announcements from the Polish and Brazilian central banks due to be announced later today, with Poland set to leave interest rates unchanged as Brazil prepares a 75 basis point rate hike .
The Brazilian real could make substantial gains in the coming year as the country’s large commodity exports surged in value and the lure of rising interest rates during a likely period of calm .
Most Central European currencies fell against the euro, with the Polish zloty falling 0.5%, the most among its peers, while the Hungarian forint and Czech koruna lost between 0.1% and 0 , 2%.
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Reporting by Shashank Nayar in Bangalore; Edited by Subhranshu Sahu
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