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May 26 (Reuters) – Emerging markets currencies headed for weekly declines on Friday as expectations of higher-for-longer U.S. interest rates gained steam, while Turkey’s lira weakened to a record low of 20 against the dollar ahead of a presidential runoff election.

MSCI’s emerging market currencies index .MIEM00000CUS was flat by 0847 GMT on Friday, but was set to log declines for the third straight week.

EM currencies have been pressured by a rally in the dollar, with investors scaling back expectations of a rate cut from the Fed this year after a slew of robust U.S. economic data, as well as the lack of an agreement to raise the U.S. debt ceiling with only a handful of days left before the deadline.

“This month’s hawkish re-appraisal of the Fed’s cycle is strengthening the dollar across the board,” ING strategists said in a note.

“Some of the more vulnerable EM currencies are hitting new lows. The subdued Chinese growth story certainly is not helping either.”

Still, the dollar =USD paused for breath on Friday on news that President Joe Biden and House Speaker Kevin McCarthy were nearing a debt ceiling agreement.

Turkey’s liraTRYTOM=D3, which has been steadily weakening since incumbent Tayyip Erdogan’s strong showing in the first round of the presidential election, breached the 20-to-the-dollar mark ahead of Sunday’s runoff vote.

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Erdogan, whose unorthodox monetary policies have unnerved foreign investors and resulted in a sharp drop in the lira, is largely expected to remain in power after the runoff.

China’s yuanCNY=CFXS rebounded from a near six-month low against the dollar on Friday, as some major state-owned banks sold the U.S. currency to prevent the yuan from sinking further.

Heightened Sino-U.S. trade tensions as well as the country’s weak economic recovery has pressed the yuan in recent weeks.

Elsewhere, South Africa’s rand ZAR= made a marginal recovery on Friday from a new record low struck overnight against the dollar, after the central bank’s super-sized interest rate hike failed to impress some traders and economists.

The rand was heading for its fifth straight week in the red, having been pummelled by a crippling power crisis and concerns about a U.S. debt default.

EM stocks .MSCIEF rose 0.6%, snapping a three-day losing streak with investors cautiously optimistic about a U.S. debt ceiling deal after the latest update. The index was also set for weekly declines of 0.7%.

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Asian stocks led gains on Friday, with India’s blue-chip Nifty index .NSEI up 0.8% and Taiwan stocks .TWII jumping 1.3%.

Among central and eastern European currencies, the Polish zloty EURPLN= fell 0.4% against the euro, pulling back from recent two-year highs, while the Czech crown EURCZK= was down 0.3%.

DBRS is expected to review Poland’s credit rating while Moody’s will review the Czech Republic’s rating later in the day.

(Reporting by Siddarth S in Bengaluru; editing by Mark Heinrich)