EMERGING MARKETS-Most EM currencies set for monthly fall as markets react to Trump, geopolitics

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Hungary’s forint at more than two-year lows vs euro

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Chinese yuan set to snap six-week losing streak

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Georgia says it will not enter EU membership talks until 2028

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Both EM FX and stocks flat, set for monthly declines

By Shashwat Chauhan

Nov 29 (Reuters) – Most emerging market currencies were headed for monthly losses on Friday as a combination of worries over U.S. President-elect Donald Trump’s policies and escalating geopolitical tensions between Russia and Ukraine weighed.

MSCI’s index for emerging market stocks was holding firm at 1079.34 points as of 0912 GMT, pinned near its lowest level in more than 11 weeks, while a gauge of currencies inched up 0.1%.

Both benchmark indexes were set for monthly losses as EM assets across the world sold off after Trump’s election victory earlier this month, while an intensification of the war between Russia and Ukraine compounded losses.

Investors have been weighing up Trump’s policies on trade, tariffs and immigration, which could ignite a global trade war and push up inflation in the United States.

“We continue to see more room for the markets to price in the consequences of Trump’s policies,” wrote Jan von Gerich, chief analyst at Nordea, in a note.

“We also expect the combination of tariffs, general uncertainty about Trump’s policies and further divergence in monetary policy outlooks between different currency areas to boost the dollar further.”

Expectations the U.S. Federal Reserve will slow down its pace of monetary policy easing supported the dollar this month, pressuring EM currencies.

Shares in emerging Asia, which account for the bulk of the weight in the benchmark index, rose on Friday, with India’s Nifty 50 about 1% higher and China’s blue-chip CSI 300 up 0.9%.

China’s yuan rose 0.1% against the dollar in offshore trading and was set to snap a six-week losing streak.

In emerging Europe, Hungary’s forint fell 0.4% against the euro to trade near its lowest level in more than two years.

In Poland, a preliminary reading of November consumer prices showed inflation rose 0.4% from the previous month, in line with estimates.

The European Union’s ambassador to Georgia said that Tbilisi’s move to effectively halt the country’s EU accession bid until 2028 was “heartbreaking” and in conflict with the wishes of most Georgians, local media reported.

Georgia’s lari weakened 0.9% against the dollar.

South Africa’s rand strengthened 0.3% against a broadly weaker dollar, with most currencies in emerging Europe also gaining ground against the U.S. currency.

Russia’s rouble traded higher against the dollar for a second day after the country’s central bank said this week that it would stop foreign currency purchases in order to ease pressure on financial markets.

Brazil’s real hit a lifetime low of 6.02 per dollar overnight with markets unimpressed by the government’s income tax reform package.

Trading activity is expected to be light owing to a holiday-shortened session in the United States, where markets were also closed on Thursday for the Thanksgiving holiday.

(Reporting by Shashwat Chauhan in Bengaluru; Editing by Kirsten Donovan)

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