EMERGING MARKETS-Romanian leu hits two-week low as markets await rate decision; EM assets flat

By Pranav Kashyap

Feb 17 (Reuters) - Most emerging market stocks and currencies were little changed on Tuesday in a holiday-thinned week, with attention turning to Romania's interest-rate decision later in the day.

Trading was subdued after a U.S. holiday on Monday drained volumes, while several Asian markets stayed shut. The MSCI emerging markets equity index .MSCIEF and the EM currency gauge .MIEM00000CUS were both flat.

In central and eastern Europe, the Romanian leu EURRON= slid to a more than two-week low, compared with the euro, and has lagged regional peers so far this year. Bucharest shares .BETI jumped 1% on the day and were up about 16% this year.

Romania's central bank is widely expected to keep rates on hold at 6.5%, but the decision comes at an awkward juncture as inflation starts to cool, while the country wrestles with the EU's widest fiscal deficit, with a budget still not in place.

Romania also tipped into a technical recession in the fourth quarter, and its sovereign rating remains at the lowest investment-grade rung.

"The central bank will have to wait a little longer, as inflation should ease in the middle of the year due to the base effect from last year," said Frantisek Taborsky, EMEA FX & FI strategist at ING.

"Today's meeting will also bring a new forecast and inflation report, where we will look for signs of dovishness."

Elsewhere in the region, Hungarian stocks .BUX slid 1.1% to a near one-month low, while Polish shares .WIG20 fell 0.8% to their weakest level in over two weeks.

On the political front, U.S. President Donald Trump is committed to the success of Hungarian Prime Minister Viktor Orban because his leadership and rapport with Trump are crucial to U.S. interests, U.S. Secretary of State Marco Rubio said on Monday, as he aimed to deepen cooperation with Central Europe.

Turkish stocks .XU100, up about 26% so far this year, eased 0.1% from record highs. The Turkish central bank's total reserves likely rose by $4.3 billion last week to $212 billion, bankers said, helped in part by a roughly $2 billion boost from higher gold prices.

Emerging markets now face a packed calendar of key data, including inflation readings from South Africa, Russia, Malaysia, India and the United States.

"Markets remained broadly stable despite ongoing sector rotation and mixed macroeconomic signals," said Michael Lok, Group CIO and Co-CEO asset management at UBP.

The South African rand ZAR= slipped 0.3% after the country's official unemployment rate fell to 31.4% in the fourth quarter of 2025.

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For CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB