*

EM stocks drop 1.4%, FX slips 0.18%

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Both indexes set for weekly losses

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Czech Republic to hold elections next week

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BRICS-backed bank plans first Indian rupee-denominated

bond by

end-March

By Nikhil Sharma

Sept 26 (Reuters) - Emerging Market assets were headed

for weekly losses on Friday, with investors booking profits in a

week dominated by key regional central bank decisions and U.S.

President Donald Trump's latest tariff threats.

The MSCI index of emerging market equities fell

1.4%, on track for its biggest one-day drop since April 7. It

was also set for its first weekly loss in four.

"We have a couple of days of a little bit of downturn, but

realistically, it's been a very strong performance of equity

markets earlier this month," said Marija Veitmane, global head

of Equity Strategy for State Street Markets, adding "Small

corrections are all positive."

Friday's losses reflected risk-averse global market

sentiment after Trump announced new import tariffs, including

100% duties on branded drugs.

A gauge of regional currencies fell 0.2%, on

track for a seventh straight decline -- the longest streak in

more than two months.

The Hungarian forint was set to end a four-week

gaining streak. Hungary's central bank kept policy easing on

pause Tuesday, at the European Union's joint highest rate of

6.50%, while forecasting tighter policy to curb inflation.

The currency extended losses to a fourth session on Friday,

down 0.33%. Meanwhile, Budapest equities snapped four

days of losses to advance 0.33% too.

The Czech Republic's central bank also stood pat on interest

rates earlier this week as it voiced the need for tight policy

in view of inflationary risks.

The Czech crown neared its first weekly decline in

six weeks, down 0.1%, while Prague equities looked set for

a fourth consecutive weekly gain, up 1.14%.

Local markets will be tested by the elections on October 3

and 4, with polls favouring the opposition ANO party of former

Prime Minister Andrej Babis over the main centre-right ruling

parties.

With no party expected to win a majority, an ANO-led

coalition could end defence supplies to Ukraine, reject the EU's

emissions-allowance system, and bring independent public

broadcasters under direct budget funding.

Separately, moves in Polish stocks and the zloty

were largely flat for the week.

Renewed strength in the U.S. dollar pressured EM currencies

as investors trimmed bets for deeper rate cuts, after cautious

indications from the Federal Reserve's speakers this week.

Attention now turns to the release of U.S. consumer spending

data later on Friday for further signals on the policy outlook.

The Indian rupee, hurt by a U.S. H1-B visa fee

hike, was stable after a sharp selloff earlier this week

prompted likely central bank intervention.

The BRICS-backed New Development Bank plans to issue its

first rupee bond in India before March 2026, aligning with

India's push to internationalize the currency.

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see

(Reporting by Nikhil Sharma in Bengaluru)