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Taiwan central bank raises benchmark rate in surprise move

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China c.bank says it has room to cut bank reserve ratio

further

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POLL-Turkey set to hold rate steady, but hike is coming

By Ankika Biswas

March 21 (Reuters) - The emerging market stocks index

rallied on Thursday, as investors cheered the Federal Reserve's

indication it will still deliver three rate cuts this year,

while Sri Lanka's dollar bonds climbed on report of bond reworks

talks set to start next week.

The MSCI index for EM stocks jumped 1.7%, on track

for its strongest one-day percentage gain this year, while the

currencies gauge climbed 0.3%, set to snap a seven-day losing

streak.

Keeping rates unchanged as expected, Fed Chair Jerome Powell

noted recent high inflation readings had not altered the

underlying "story" of slowly easing price pressures as the

central bank stuck to its projection of three rate cuts this

year.

"This would put less capital pressure on emerging markets

and traders can start picking up value in more depressed EM

stocks," said Simon Harvey, head of FX analysis for Monex

Europe.

"We can start looking towards better growth prospects in EM

on looser monetary policy because a lot of the central banks

especially in Asia have been holding higher rates trying to

match the Fed purely because the implications it would have for

their local currency if all of a sudden they cut in advance and

from a much lower base."

Further, a deputy central bank head said China has room to

further cut banks' reserve requirement ratio (RRR), underlining

expectations for more easing measures to bolster economy.

Hong Kong's Hang Seng index and the Mainland

Properties index jumped 1.9% and 3.3%, respectively,

even though Chinese property developer Radiance Holdings

slumped 7.7% after missing repayment of a $300-million

offshore bond due the previous day.

Investor focus was also on other policy decisions in the EM

space, with Turkey's rate decision due during the day expected

to leave rates unchanged at 45%, though most economists forecast

another rate hike later this year, a Reuters poll showed.

While the lira weakened nearly 1% against the

dollar, the benchmark stock index jumped 1.5%.

A media report showed global investors and Sri Lankan

officials expect to start negotiations aimed at restructuring

$12 billion in defaulted global bonds next week, helping the

2028 bond witness the biggest gains, up 2.03

cents at 56.49 cents, Tradeweb data showed.

Elsewhere, Taiwan delivered a surprise rate hike, and also

lifted annual inflation forecast as price pressures persist.

Brazil cut its rate by 50 basis points on Wednesday, as

expected, while Mexico will announce its policy decision later

in the day.

HIGHLIGHTS:

** Russian rouble steadies as focus turns towards rate

decision on Friday