EMERGING MARKETS-EM on track for stellar week despite tech-led wobble; Russian rate call looms

By Pranav Kashyap

Feb 13 (Reuters) - Emerging-market stocks and currencies slipped from record highs on Friday after a tech-driven Wall Street selloff overnight, but remained on track for solid weekly gains, while Russia geared up for an interest-rate decision.

The EM rally hit a speed bump as global risk appetite took a back seat and concerns about tightening margins in the tech sector dragged U.S. equities lower overnight. The MSCI EM equity index .MSCIEF slipped for the first time after gaining in the past four sessions, while a similar gauge for EM currencies .MIEM00000CUS fell for the first time in after rising for the last five.

Stock benchmarks in Mumbai .BSESN, Singapore .STI, Manila .PSI, Warsaw .WIG20, Johannesburg .JTOPI, Bucharest .BETI and Budapest .BUX all sank more than 1% on the day.

Focus was on Russia, with the central bank's rate decision due later in the day.

Growth there cooled and inflation generally eased through 2025. But January's tax-driven price flare-up, along with war-related distortions, sanctions and heavier defence spending, has kept inflation risks uncomfortably high and made the policy path less straightforward.

The rouble RUB= edged about 0.2% higher versus the dollar, with the central bank widely expected to hold rates steady at 16%.

Elsewhere, Ukraine's international dollar bond strengthened after the country signalled its new $8.2 billion programme with the International Monetary Fund could be approved within weeks - a key milestone as Russia's invasion grinds into its fifth year.

Romania slipped into technical recession in the fourth quarter, after tax hikes aimed at narrowing a ballooning budget deficit hit domestic demand. Stocks in Bucharest .BETI were down 1.2%, while the leu EURRON= was flat against the euro.

Romania is also wrestling with the European Union's largest fiscal deficit and a sovereign credit rating sitting on the lowest rung of investment grade with a negative outlook, effectively a downgrade warning. Fitch was due to review the country later in the day.

The Polish zloty EURPLN= was flat, while stocks fell 1.5% as fresh data showed inflation eased less than expected in January.

While much of central and eastern Europe and Asia remained under pressure, there were some pockets of strength.

Egyptian stocks .EGX30 jumped 1.6% after the central bank cut its interest rates by 100 basis points, extending an easing cycle as inflation falls.

EM SET FOR BEST WEEK IN MONTHS, INFLATION IN SPOTLIGHT

This week brought a flood of inflation data across major EM economies. Brazil and Hungary showed signs of cooling price pressures, Mexico saw inflation speed up, and Turkey's inflation expectations widened.

The takeaway for markets was the resilience in the economies, and the data did not trigger any new alarm bells, helping keep sentiment supported.

The day's losses did not knock the EM rally off course. EM equities were on track for their strongest week since September 2025, while EM currencies were headed for their best weekly performance since June 2025.

"This ongoing resilience may create some challenges from a relative valuation perspective," Barclays' EM strategy analysts said.

"But the fact that market volatility has been focused mainly on the U.S. ... it may add to EM credit's appeal and attract further flows into the asset class."

In South Asia, the Bangladesh Nationalist Party secured an overwhelming two-thirds majority in Friday's general election, raising hopes for a period of stability after months of turbulence following the ouster of the former prime minister.