EMERGING MARKETS-EM assets subdued ahead of Hungary rate verdict, Indian rupee at record low

By Nikhil Sharma

Sept 23 (Reuters) - Emerging market assets traded cautiously on Tuesday, with the Hungarian forint weakening ahead of an interest rate decision, while the Indian rupee fell to a record low on concerns surrounding a U.S. visa-fee hike.

An index tracking emerging market equities .MSCIEF edged up 0.12%, while a similar gauge for currencies .MIEM00000CUS dipped 0.1%.

The Hungarian forint EURHUF= was down 0.3% as investors braced for a rate decision due at 1200 GMT, with expectations the central bank will keep the base rate unchanged at the European Union's joint-highest level of 6.5%.

That would mark a full year of the central bank maintaining its rates unchanged as sticky inflation - above the tolerance bank - continues to weigh on expectations for easing.

However, a high interest rate differential, further emboldened by the Fed's rate cut last month, would continue to support the local currency.

"The central bank has managed to build some market confidence in a longer-lasting carry, and the HUF has become a popular carry trade across the entire emerging market space," analysts at ING said in a note.

Hungary's main equity index .BUX lost 0.36% to hover near an 11-week low.

Markets were also looking ahead to the policy meeting in the Czech Republic on Wednesday, with the Czech National Bank likely to keep its monetary easing cycle on hold for longer on lingering inflation risks.

The fears of a potential hawkish outlook from policymakers kept the country's assets subdued on Tuesday. Czech crown EURCZK= and Prague equities .PX were flat.

The Czech Finance Ministry will offer up to 18 billion crowns ($874.85 million) worth of domestic government bonds in auctions in October.

Polish stocks .WIG20 jumped 0.78% - set to snap their four-day streak of losses. Monetary Policy Council member Przemyslaw Litwiniuk projected a possible quarter-point cut in November. Poland's central bank had indicated caution with future cuts during its last policy meeting. The zloty EURPLN= was largely steady.

Meanwhile, Indian markets continued to struggle following U.S. President Donald Trump's announcement of a $100,000 fee on new H-1B visa applications. Indian IT stocks .NIFTYIT extended declines, down 0.34%

Indian rupee INR=IN fell 0.53% to an all-time low amid concerns that the visa fee hike could slow remittance growth, presenting a grim outlook for the currency.

In Indonesia, the rupiah IDR= extended losses to the fourth session, down 0.36%, on concerns over the country's fiscal discipline following a surprise rate cut by the central bank last week.

The parliament on Tuesday approved President Prabowo Subianto's 2026 budget with 3,842.7 trillion rupiah ($231.5 billion) in spending and a 2.68% of gross domestic product deficit, under the 3% limit.

In Latin America, attention centered on a meeting between Trump and Argentine President Javier Milei in New York later in the day.

Investors were hoping for Washington to present an action plan after a pledge of support from U.S. Treasury Secretary Scott Bessent helped buoy Buenos Aires markets on Monday.

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For RUSSIAN market report, see RU/RUB