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Key central bank decisions due this week

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Investors to monitor geopolitical developments

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Turkey sees outflows; Seoul, Taipei at records

By Niket Nishant

Oct 20(Reuters) - Emerging market stocks and currencies

rose on Monday, as wagers on a weaker dollar and potential

Federal Reserve rate cuts drove investors abroad, while optimism

around trade negotiations buoyed sentiment.

An MSCI index of emerging market equities rose

1.52%, to hover near its highest level since June 2021, while

the currencies gauge crept 0.14% higher, near

its two-week high.

"Concerns about the health of regional banks and the broader

quality of credit in the U.S. remain very central for FX

markets," economists at ING wrote in a note.

Investors wager that the strain in the U.S. banking industry

could spur sharper interest rate cuts by the Federal Reserve and

a shift toward higher-yielding assets abroad.

Expectations that the dollar will decline further has

added to the appeal of emerging market currencies.

The moves kick off a pivotal week featuring a raft of

central bank policy decisions, including out of Turkey and

Hungary. Later on Monday, Romania's central bank is also

expected to release minutes from its governing council meeting

earlier this month.

Poland's blue-chip WIG20 index hit its highest in

nearly two months and was last up 1.67% as investors assessed

data on wages and producer inflation.

Investors will also be awaiting developments from a meeting

between U.S. President Donald Trump and Russian President

Vladimir Putin to discuss the war in Ukraine, with any hint of a

ceasefire likely to fuel risk appetite.

"Central and Eastern Europe FX has a good constellation of

conditions for further rally with a potential boost from a

Ukraine-Russia ceasefire," ING added.

SPLIT PERFORMANCE

Elsewhere, equities in Seoul and Taipei hit

all-time highs, while China's blue-chip CSI300 index

climbed 0.53% and the Shanghai Composite Index rose

0.63%.

Trump on Friday expressed hope for a "fair deal" with

Beijing and reaffirmed plans to meet with his Chinese

counterpart Xi Jinping later this month, offering some relief to

investors.

However, China's economic growth slowed to the weakest pace

in a year in the third quarter due to fragile domestic demand.

Traders will be on the look out for details on any fiscal

stimulus as officials review a proposed five-year roadmap for

the economy.

Selectivity also remains key, as countries with strong macro

fundamentals and credible policy regimes are expected to benefit

more.

An outflow from Turkey's risk assets continued, with the

main BIST 100 share index down 0.63% and set for its

third consecutive session in the red if current levels hold.

Investors are monitoring the market impact of a politically

sensitive court ruling that could reshape the country's

opposition leadership.

India's stock benchmarks Nifty and Sensex

rose about 0.63% each against the backdrop of ongoing trade

negotiations with the U.S.