* Lira trades near five-month highs * Rouble continues to lag peers * Czech crown best CEE performer this year Feb 3 (Reuters) - Turkey’s lira rose on Wednesday as higher-than-expected inflation reinforced bets of tight policy, while the recent rally among most other emerging market stocks and currencies appeared to have cooled. The lira rose 0.6% to the dollar, staying near five-month highs after consumer price inflation - a metric closely associated with economic health - rose above expectations in January. The reading furthered the case for tight monetary policy in the country, which the central bank has vowed to maintain until inflation falls within its target range. “This change in policy was precipitated by lira weakness, FX pressure, a higher deposit dollarisation ratio, widening current account deficit and high inflation,” Fitch Ratings said in a report. “Positive steps have been taken to improve policy credibility but this process will take time, as will rebuilding Turkey’s depleted foreign exchange reserves.” The lira, however, remains one of the best performing EM currencies this year, trading up about 3.8%. Most other currencies in Europe, the Middle East and Africa were flat after logging large gains earlier this week. The U.S. dollar held around two-month highs as the country’s economy appeared to be experiencing a stronger recovery from the COVID-19 pandemic in comparison with its global peers. EM stocks and currencies have rallied this week on anticipation of a bumper U.S. stimulus package, as well as renewed optimism over vaccine rollout programs across the globe. South Africa’s rand rose 0.1%, extending gains into a fifth consecutive session on optimism over the country acquiring COVID-19 vaccines. The rand’s relatively high yield, or carry rate, has sheltered it from weakness caused by local economic ructions, which had existed well before the pandemic. South African stocks added 0.4%, while the MSCI’s index of EM equities rose 0.6%, extending gains into a third consecutive session. Central European currencies rose against the euro, as the unit tumbled on a slow vaccine rollout and signs of a sluggish economic recovery. The Czech crown is by far the best performing currency in the region this year, and was trading at a near 10-month high on a strong economic recovery. “A better-than-expected recovery in economic activity should add to the confidence of the Czech National Bank to normalize its policy faster than its Central European peers,” Credit Suisse analysts wrote in a note. Russia"s rouble and stocks continued to lag their EM peers as concerns over western sanctions weighed. The currency is down more than 3% this year. For GRAPHIC on emerging market FX performance in 2021, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2021, see tmsnrt.rs/2OusNdX For TOP NEWS across emerging markets For CENTRAL EUROPE market report, see For TURKISH market report, see For RUSSIAN market report, see (Reporting by Ambar Warrick in Bengaluru; Editing by Krishna Chandra Eluri)