EMERGING MARKETS-EM assets mixed as investors weigh central bank decisions and geopolitical tensions

By Utkarsh Hathi

Sept 23 (Reuters) - Emerging market assets were mixed on Wednesday, as investors balanced easing oil prices against geopolitical developments and a string of central bank decisions across developing economies.

MSCI's index tracking EM currencies .MIEM00000CUS dipped 0.1%, though it remained on course for its strongest quarterly performance since June 2025 as investors continued to favour higher-yielding currencies despite a firmer dollar and rising rate expectations in developed markets.

"At a time when the outlook seems to be continued robust growth, we are looking for where to get still appealing yields, and some emerging market currencies are offering that," said Tilmann Kolb, an analyst at UBS.

The Indonesian rupiah was one of the few gainers in Asia, up 0.3%. Indonesia's central bank kept rates unchanged on Wednesday at its first meeting after Destry Damayanti's appointment as governor earlier this month.

Jakarta's benchmark stock index .JKSE rose 1.6%, snapping a three-day losing streak.

The South African rand slipped 0.5% after annual inflation in August came in slightly below expectations ahead of a widely expected quarter-point rate hike by the central bank later in the day.

"The rand remains linked to the general growth outlook, the broader risk sentiment in the world economy, and the precious metals prices," Kolb said.

South African equities .JTOPI fell 1.5% to the lowest in seven weeks, tracking weaker precious metal prices.

MSCI's index tracking EM stocks .MSCIEF edged 0.2% higher to its highest in nearly two weeks, as heavily weighted South Korean and Taiwanese indexes supported the benchmark.

South Korea's KOSPI .KS11 and Taiwan's tech-heavy .TWII gained 0.9% and 0.8%, respectively, while Chinese equities .CSI300 slipped 0.6% ahead of a meeting between US President Donald Trump and Chinese President Xi Jinping.

Markets also assessed prospects for US-Iran talks after Trump said his envoys had held productive talks with mediators from Tehran to end the war, though he also threatened to "annihilate" Iran if no deal was reached with the Islamic Republic.

Oil prices were holding firm at $99.38 per barrel, after they pared early session declines on improved prospects of crude supplies from the Middle East. O/R

Bucking the trend, an index tracking Central and Eastern European stocks .MIME00000PUS dipped 0.7%, with most regional benchmarks declining except Hungary's .BUX that gained 0.2%.

The central bank of Hungary held rates steady on Tuesday and lowered its inflation target to 2.5% from 3%. The decision sent the forint to its highest in September against the euro, before it slipped 0.4% on Wednesday.

The Polish zloty edged 0.3% lower.

The Turkish lira was muted, while stocks .XU100 rose 0.3%. The Organization for Economic Co-operation and Development on Wednesday sharply raised its inflation forecasts for Turkey for 2026 and 2027, while trimming its growth projections for both years.

Elsewhere in Asia, the International Monetary Fund said on Wednesday that Sri Lanka's economy remained resilient despite successive shocks, though risks to the outlook continue to be tilted to the downside.

HIGHLIGHTS:

** Taiwan to maintain 'close contact' with US on arms sales

** India business activity rebounds in September to 3-month high, PMI shows

** US to fund $7 billion of Argentina mineral, energy projects, document shows

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