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EM stocks down 0.56%, FX down 0.28%

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Polish rate decision at 1200 GMT

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Hungary's September inflation stable at 4.3% y/y, below forecast

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Czech jobless rate steady at 4.5% in September

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Czech retail sales rise 3.5% y/y in August

By Nikhil Sharma

Oct 8 (Reuters) - Emerging market stocks and currencies fell on Wednesday in a busy day

packed with regional data releases in Eastern Europe and an upcoming interest rate decision in

Poland.

The MSCI index of EM currencies fell 0.3%, extending the previous session's

losses, dragged by a stronger U.S. dollar, stemming from the government shutdown in the United

States and expectations of increased fiscal spending in Japan.

A parallel gauge for EM equities dropped 0.56%, pulling back after strong gains in

recent trading sessions.

The National Bank of Poland (NBP) is expected to hold its interest rate later today,

reflecting the central bank's cautious, data-dependent stance.

"The decision will be a close run, with the market split between a rate cut and a hold. We

expect the central bank to keep the policy rate unchanged at 4.75%," analysts at Danske Bank

said in a note.

"Governor Glapiński has indicated a 'cautious will' within the Board to cut rates further,

and we expect at least one more cut during Q4."

The bank cut its main interest rate by 25 basis points last month, citing a decline in

inflation.

Polish zloty was flat, while Warsaw stocks slipped 0.2%.

The Hungarian forint remained under pressure, down 0.25%, amid renewed government

pressure to cut borrowing costs despite the central bank's doubling down on its strict monetary

policy.

The currency had fallen nearly 1% in the previous session - its worst single-day drop since

April 11. On Monday, Prime Minister Viktor Orban said Hungary's main rate, currently at the

European Union's joint-highest level, was "higher than it could be."

Fresh data revealed inflation kept steady outside the central bank's tolerance band in

September, creating an obscure outlook for future policy decisions. The country's main stock

index was up 0.45% on Wednesday.

The Czech crown and the country's main equity index remained steady for the

day. Fresh data showed the country's unemployment rate was steady at 4.5% in September, while

retail sales grew 3.5% year-on-year in August, beating expectations.

Despite benign data, concerns about fiscal indiscipline mounted after ANO leader Andrej

Babis, who won the recent parliamentary election, flagged a potentially wider budget deficit

than the outgoing government.

The populist ANO leader ran his campaign promising lavish government spending to raise

wages, cut taxes, and accelerate growth - measures that would cost billions of euros.

Elsewhere in Emerging Markets, Vietnam's stocks closed at a record high after

investors cheered FTSE Russell's announcement that the country was set to be upgraded to

emerging market status.

Additionally, FTSE Russell reclassified Greece from advanced emerging to developed market

status, effective September 21, 2026. The country's main stock index jumped 1.2% to a

more than one-month high.

Egypt was added to a watch list for a downgrade to frontier market status from secondary

emerging market status, while Nigeria was slated for a possible upgrade to frontier status from

its current unclassified status.

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