Emerging Market Stocks Surge Amidst Global Dollar Cues

Emerging market stocks gained as Asian equities surged, while currencies stabilized with investors watching dollar movements. The MSCI index rose for a third session as Asian markets improved. South Africa's central bank may cut rates before inflation data, as EM currencies previously suffered due to Federal Reserve expectations.

Emerging market stocks received a boost on Tuesday, driven by a surge in heavyweight Asian equities, while most currencies remained steady as global investors sought guidance on the U.S. dollar's trajectory. The MSCI index for emerging market stocks climbed by 0.7% by 0900 GMT, poised for its third consecutive session of gains as stock exchanges in China, India, and Taiwan showed positive momentum. Beijing officials assured Wall Street executives of ongoing capital market reforms and a commitment to opening up its financial sector to foreign investments, in addition to supporting Hong Kong's status as a global financial hub.

Currency markets, however, presented a mixed picture. China's yuan depreciated by 0.2% in offshore trades, and the Indian rupee fell to a historic low of 84.415 per dollar. Meanwhile, Central Eastern European forex markets experienced pressure, with Hungary's forint losing 0.3% against the euro. Hungary's central bank is anticipated to keep its interest rate unchanged at 6.5%, a joint highest in the European Union alongside Romania, as South Africa's rand weakened by 0.7% against the dollar, with key economic decisions looming.

Expectations of a 25 basis point rate cut in South Africa's central bank may coincide with Wednesday's upcoming inflation figures. South Africa's stock market rose by approximately 0.5%, driven by gains in gold mining companies due to an increase in bullion prices. Last week, emerging market stocks and currencies were impacted by U.S. President-elect Trump's policies and Federal Reserve monetary policy expectations, though the current steadiness of the dollar index suggests limited fluctuations before the U.S. November jobs report.

(With inputs from agencies.)