EMERGING MARKETS-EM stocks notch fresh record high; currencies firm on weaker greenback

By Pranav Kashyap

Feb 11 (Reuters) - A gauge tracking global emerging market stocks hit a fresh record high on Wednesday, with EM currencies also firming as a run of downbeat U.S. economic readings took some of the shine off the dollar.

MSCI's index tracking global EM index .MSCIEF rose 0.8%, touching a fresh record peak earlier in the session, while a similar gauge .MIEM00000CUS for currencies edged up 0.4%.

In central and eastern Europe, Ukraine's international dollar bonds jumped more than a cent. The Financial Times reported President Volodymyr Zelenskiy plans to announce an elections-and-referendum plan on February 24. U.S. Treasury Secretary Scott Bessent also struck an optimistic tone overnight on the Russia-Ukraine war.

The Hungarian forint EURHUF= fell 0.6%, ahead of the minutes of the central bank's January meeting.

Inflation has already cooled markedly - Hungary's headline rate slipped to a 15-month low of 3.3% in December, edging closer to the central bank's 3% target. The forint shed more than 1% that month. The currency could face renewed pressure if January inflation, due Thursday, lands at 2.4%.

Budapest stocks .BUX dipped 0.7%, while most regional peers posted mild losses. The political backdrop in Hungary added another layer of caution ahead of the April 12 national election, where right-wing Prime Minister Viktor Orban will seek to extend his 16-year hold on power.

Societe Generale's Kenneth Broux said that the forint could be bolstered as speculation builds of a potential change in government.

"An election victory by opposition Tisza in April could unlock EU funds."

Turkish stocks .XU100, one of this year's standout performers among emerging peers, was volatile while the lira TRY= was flat on the day after President Tayyip Erdogan named Akin Gurlek, a controversial prosecutor, as the country's new justice minister.

Gurlek was closely associated with a sweeping crackdown on the main opposition party, a move that spooked investors and fuelled a sharp selloff in Turkish assets earlier in 2025.

More broadly, emerging-market stocks have been beating both the S&P 500 .SPX and Europe's STOXX .STOXX so far this year, and analysts see room for the rally to run. A rotation away from richly valued U.S. tech, paired with a renewed appetite for cheaper, overlooked corners of markets, has put EM back in the spotlight.

A likely further drop in Hungarian inflation, a new pro-growth government in Thailand, the prospect of rate cuts in the Philippines, a U.S.-India trade deal, and renewed interest in lower-priced Asian tech shares, all added to the case for diversification.

The tech-heavy emerging Asian equities index .MIMS00000PUS touched a fresh record high on the day.

Elsewhere, the dollar =USD continued to wobble as soft U.S. data kept pressure on the greenback, giving emerging-market currencies a little more breathing space.

"The next direction (for EM) in the end may be set later by US labour market data," said Frantisek Taborsky, EMEA FX & FI strategist at ING.

Meanwhile, the Egyptian pound EGP= was 0.3% lower as the country approved a relatively limited cabinet reshuffle on Tuesday, state media reported.

Across Southeast Asia, Indonesian stocks .JKSE extended their rebound, rising 2% to their highest close in nearly two weeks, while Vietnam .VNI snapped a five-day losing streak and surged 2.4%, its strongest gain in more than a month.