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Rand extends recovery

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Hungary c.bank statement at 1400 GMT

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Investors eye U.S. data, Fedspeak

By Sruthi Shankar

June 18 (Reuters) - The South African rand rose to a

near four-week high against the dollar on Tuesday as investors

awaited cabinet selection after the new coalition government was

announced, while the forint eased ahead of a monetary policy

decision in Hungary.

The rand rose to 18.1125 per dollar, its strongest

level since May 22 and recovering from losses driven by election

results earlier this month that saw the African National

Congress (ANC) lose its majority.

Five political parties signed up on Monday to join a

government of national unity, including the pro-business

Democratic Alliance which is favoured by markets.

"The coalition will be within striking distance of a

powerful two-thirds supermajority in the assembly, making

structural changes possible," according to a BCA Research note.

"Investors need to monitor closely for these changes and

whether they are conducive to economic productivity or political

stability. A major, positive political change suggests that the

rand will rebound versus the US dollar in the near term."

The Hungarian forint eased to 395.77 per euro,

having come to close to the psychological 400 level last week.

Hungary's central bank is narrowly seen opting for the

smallest rate cut in its 14-month-old easing cycle later on

Tuesday, a Reuters poll of economists showed, with the majority

projecting a 25-basis point reduction, bringing Hungary's key

rate down to 7%.

Central and east European currencies were hammered last week

as investors grew concerned about the divergent rate outlook in

the region and the United States as well as the fallout of

victory for far-right groups in the European Parliament

elections.

Other EM currencies were mostly subdued on Tuesday as

investors awaited more U.S. data and speeches from Federal

Reserve officials for hints on potential rate cuts after hawkish

projections from the U.S. central bank spooked investors last

week.

A gauge of developing world stocks rose 0.6%,

touching a 20-day high at one point, led by a 2.5% jump in South

African stocks and rebounding Chinese shares.

The main U.S. stock indexes, the S&P 500 and Nasdaq, scored

record closing highs on Monday as technology shares rallied on

enthusiasm over artificial intelligence.

HIGHLIGHTS:

** Putin vows trade, security with North Korea beyond reach

of West

** South Korea central bank chief says inflationary pressure

easing

** Fitch Ratings raises India's 2024/25 GDP forecast to 7.2%

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