EMERGING MARKETS-Stocks edge higher on tech boost; Romanian politics in focus

By Sudeshna Ghoshal and Johann M Cherian

Oct 21 (Reuters) - MSCI's emerging markets equity index edged higher on Wednesday, supported by Asian technology gains, while investors were relieved that months of political uncertainty in Romania were at an end as Luca Niculescu was confirmed as prime minister.

The benchmark index .MSCIEF was up 0.9%, with AI stocks in South Korea .KS11, Taiwan .TWII and Hong Kong .HSTECH logging strong gains after results from Elon Musk's SpaceX SPCX.O reflected strong demand for the technology.

In Indonesia, the local central bank kept its main policy rate unchanged, but hiked its deposit facility rate and said it would cut its reserve requirement ratio for commercial banks in stages and offered new incentives for some hedging transactions to attract foreign inflows and support the rupiah.

The country's equities markets had taken a blow after a warning from MSCI that it would be downgraded to "standalone" status last week.

"Officials are struggling to work out whether to prioritise supporting the rupiah or boost growth," Jason Tuvey, deputy chief emerging markets economist at Capital Economics, said.

"These mixed messages risk undermining the central bank’s credibility, fuelling fresh pressure on the rupiah and ultimately forcing policymakers to keep interest rates high for longer."

Stocks .JKSE reversed earlier losses and were last up 0.3%, while the rupiah dipped 0.1% to a record low of 18,000 per dollar.

In Central and Eastern Europe, the end of a political deadlock was a relief for Romania, which has struggled to retain investor confidence as deteriorating public finances threatened its investment-grade credit rating.

The BET Index .BETI dipped 0.7% but was near a two-month high, while the leu hovered at 5.32 per euro.

"An increase in political stability is certainly positive," said Yesenn El-Radhi, senior vice president, global sovereign ratings at Morningstar DBRS. "But it remains to be seen what the fiscal priorities of the new government will be."

In South Africa, the rand dipped 0.2% after data showed consumer inflation rose at a slower-than-expected pace in September.

The focus was also on the upcoming mid-year budget review, with the finance minister expected to present an improved fiscal outlook, with a revenue windfall bolstering a push to regain an investment-grade credit rating.

Ukrainian bonds , gained for a second-straight day after sources told Reuters that US special envoy Steve Witkoff and Russian President Vladimir Putin will discuss the conflict in Ukraine during talks in St Petersburg. The meeting comes a day after Witkoff met Ukrainian President Volodymyr Zelenskiy in Oslo.

Senegal's international bonds , showed signs of steadying after sharp declines in the previous session when National Assembly President Ousmane Sonko said lawmakers would not back budget legislation, raising doubts over how quickly the government can push ahead with its debt rework.