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EMERGING MARKETS-EM stocks and FX soften as Russia sanctions spur uncertainty
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EMERGING MARKETS-EM stocks and FX soften as Russia sanctions spur uncertainty
Oct 23, 2025 2:04 AM

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Ukraine's international bonds surge

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Turkey rate decision due

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Oil prices gain more than 3%

By Niket Nishant

Oct 23 (Reuters) - Emerging market assets weakened on

Thursday after the U.S. and the European Union ratcheted up

pressure on Russia, heightening geopolitical risks and casting a

shadow over the region that has posted robust returns this year.

An MSCI gauge of emerging markets equities dipped

0.1% while the currencies gauge also edged 0.1%

lower and was on track for its third straight day in the red if

current levels hold.

The developments underscore how Russia-Ukraine tensions are

still reverberating across regions, and highlight that even

markets with strong long-term fundamentals are not immune to

sudden geopolitical shifts.

NEW SANCTIONS ON RUSSIA

Prospects of a major breakthrough in resolving the conflict

had bolstered hopes among investors this month, but those

expectations quickly faded after a planned summit between U.S.

President Donald Trump and his Russian counterpart Vladimir

Putin was put on hold.

Moscow held nuclear drills on Wednesday, while Washington

hit two of Russia's largest oil companies with sanctions. The EU

also approved a 19th package of sanctions against Russia.

"The key question at this stage is whether sanctions

effectively reduce Russian oil flow. Back in January, the

ultimate impact on Russian flows was limited," ING economists

wrote in a note.

Ukraine's international bonds staged a rally, with issues

maturing in 2035 and 2036 up more than 1 cent each, according to

Tradeweb data.

TURKEY RATE DECISION LOOMS

Investors will also watch Turkey's central bank, with a

policy decision due on Thursday.

Turkish central bankers told foreign investors in meetings

last week that they were increasingly concerned about inflation

and suggested they were ready to slow down the pace of interest

rate cuts, four participants in the discussions told Reuters.

The decision will offer fresh cues to investors at a time

when the political climate in the country has come under fresh

scrutiny.

Investors have been monitoring the market impact of a

politically sensitive court ruling that could reshape the

country's opposition leadership.

"Turkey simply has a credibility issue," said Carlos von

Hardenberg, founder of investment firm MCP Emerging Markets.

"The private sector in Turkey is phenomenal. But in the

absence of a credible clean-up of government policy, you will

continue to see Turkey not being the top preference for emerging

market investors."

The main BIST 100 share index was up 0.8%, but has

still lost 3.9% this month.

INDIAN EQUITIES HIGHER

India's benchmark BSE Sensex climbed 0.7% and the

broader NSE Nifty 50 index advanced 0.7%, in a

broad-based rally led by IT stocks on expectations of a trade

deal with the U.S.

Indian refiners are poised to sharply curtail imports of

Russian oil, Reuters reported. Oil prices rose over 3%.

Saudi Arabia's benchmark index, whose fortunes are

closely tied to oil prices, was 0.3% lower. Oil behemoth Saudi

Aramco's shares eased after hitting a five-month high

on Wednesday.

South Korea's Kospi index eased from a record high

after the Bank of Korea voted to keep its benchmark interest

rate unchanged. Policymakers remain open to a cut in the next

three months, however, governor Rhee Chang-yong said.

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