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EM stocks and FX positioned for monthly gains

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Polish CPI in September lower than expected

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Indian Rupee hits record low

By Nikhil Sharma

Sept 30 (Reuters) - Emerging market stocks edged higher

on Tuesday, nearing their best monthly performance in nearly two

years, while currencies also firmed in a month largely dominated

by key central bank decisions.

The MSCI index of emerging market equities rose

0.4% for the day, taking its monthly gains to 6.9% - eyeing its

best month since November 2023.

A parallel index for regional currencies

remained steady and was up 0.43% month-to-date, set for its

second straight monthly rise.

But, a spectre of caution also loomed as investors feared a

U.S. government shutdown, which could delay the issue of

Friday's key U.S. employment numbers and complicate the outlook

for the Federal Reserve.

"We think we could be in line for a repeat of that

(Liberation Day uncertainty) over the coming weeks if this

government shutdown is not averted," said Nick Rees, head of

Macro Research at Monex ( MNXBF ).

"So we think that's likely to be the big driver, at least in

the short run, for most of the FX markets with obvious

spillovers to emerging markets."

In Central-Eastern Europe, Romanian stocks

outperformed their peers and jumped 3.9% this month. The

country's new pro-EU government continues with its efforts to

reduce a budget gap that reached over 9% of gross domestic

product last year - more than triple the EU-mandated 3% limit.

The local currency leu was largely flat this

month.

In Hungary, the currency forint was largely

unchanged on Tuesday, but up 1.4% month-to-date as the currency

continues to leverage high interest rates, which currently stand

at the European Union's highest of 6.5%.

Last week, the National Bank of Hungary left its base rate

steady and stressed the need for tight policy to curb inflation,

which appears to be rising in the 2026 election year.

The currency is among the top regional performers in

September. Budapest equities were down 0.56%, taking

their monthly losses to 3.7% - among the worst in the region.

Fresh data showed Hungary's industrial producer price

inflation slowing to 2.3% in August from 4.5% in July, while the

country's foreign trade surplus narrowed marginally in August.

The Polish zloty was down 0.2% in September, as

this month's quarter-point rate cut weighed. However, high state

budget deficits for the economy dampened hopes for further

easing. The currency was flat for the day.

Polish inflation in September came in slightly below

expectations and remained at the same level as in August,

raising hopes for a future rate cut.

Warsaw stocks declined 0.9% on Tuesday and were up

0.5% this month as the index struggled to find direction

throughout September, oscillating between gains and losses.

The Czech crown edged down 0.24%, but jumped 0.4%

for the month, marking its eleventh-straight monthly gains - a

streak not seen at least since February 1999.

The currency benefited from the central bank's decision last

week to extend its rate pause and signal the need for tight

policy amid inflation risks. Prague stocks fell 0.45% on

the day but rose 2.6% for the month.

Data showed the economy grew 0.5% quarter-on-quarter in the

second quarter, while increasing 2.6% year-on-year.

Czech markets are now looking to this week's parliamentary

elections, with the opposition ANO party of former Prime

Minister Andrej Babis leading opinion polls ahead of the main

centre-right ruling parties.

Elsewhere, the Indian rupee traded at record lows on

Tuesday amid the central bank's intervention. Investors also

braced for a crucial Reserve Bank of India rate decision on

Wednesday in view of simmering U.S.-India trade tensions.

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see