EMERGING MARKETS-FX, stocks lower as Trump's tariff deadline looms closer

By Purvi Agarwal

Jan 31 (Reuters) - Indexes of emerging market currencies and stocks were lower on Friday with investors bracing for a Feb. 1 deadline for U.S. tariffs as a week marked by increasing trade tensions and a slew of central bank decisions drew to a close.

In his latest comments on tariffs, U.S. President Donald Trump said on Thursday he would soon decide whether to exclude Canadian and Mexican oil imports from the 25% tariffs that he has vowed to impose on Saturday. Trump also said he was still considering new tariffs on Chinese goods.

The Mexican peso MXN=, among the most exposed to tariffs, was up 0.2% in early trading, after logging losses of nearly 1% in the previous session.

Threats of tariffs, combined with increasing prospects of interest rates in the world's largest economy staying higher for longer continue to pressure riskier EM assets globally, as they also tackle an uncertain growth outlook.

"Markets have been pricing in a more favourable Trump scenario. Now that we see him getting a bit more aggressive, uncertainty is filtering into global markets," said Aneeka Gupta, director of macroeconomic research at WisdomTree.

"We could see further volatility coming in once we see those announcements come into play tomorrow."

Despite uncertainty, emerging market debt notched inflows of $1.4 billion in the week through Jan. 29, the biggest inflow in two years, according to Bank of America's flow show, while EM stocks notched their first inflow in three weeks.

EM sovereign debt issuance this week amounted to $4.5 billion, putting year-to-date issuance about $3 billion below this point last year, according to Morgan Stanley.

On the day, MSCI's index tracking global EM currencies .MIEM00000CUS was down 0.3%, set for its third month of declines. The stocks gauge .MSCIEF was down 0.2%, but set for its best month since September.

The Hungarian forint EURHUF= and the Polish zloty EURPLN= slipped 0.6% and 0.3% against the euro, respectively.

The Czech economy grew by half a percent on a quarterly basis in the fourth quarter of 2024, preliminary data showed. The crown EURCZK= was slightly lower against the euro.

A draft proposal on Thursday showed that Romania's 2025 budget will target a 16% rise in revenue to 667.5 billion lei ($139.38 billion).

Fiscal decisions in Romania are closely watched after ratings agencies such as Fitch and S&P cut their outlook for the country to negative amid concerns of delayed cuts to its deficit.

South Africa's rand ZAR= was little changed, a day after the country's central bank cut interest rates by 25 basis points.

HIGHLIGHTS:

** Thai central bank says economy slowed in December

** IMF's managing director to visit Ethiopia for talks with authorities

** Divided Ecuador presidential polls show likely win for Noboa after runoff

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