China brings relief but oil sends Indian rupee to record low



* Indian rupee skids to record low

* China's COVID relief lifts stocks

* Hungary rate decision due later on Tues

By Sruthi Shankar

June 28 (Reuters) - News that China is easing COVID-19 restrictions lightened mood across emerging markets on Tuesday, although a rebound in oil prices sent importers of the commodity such as Indian rupee to a record low and kept the Turkish lira under pressure.

Asian stocks swung higher, with Shanghai's blue-chip CSI300 index .CSI300 closing 1.0% higher and Hong Kong's Hang Seng index .HSI rising 0.9%. The former has climbed 19.7% since hitting a trough on April 26.

The yuan CNH=EBS also firmed in offshore trading after China slashed the quarantine time for inbound travellers by half in a major easing of one of the world's strictest COVID-19 curbs.

Spurring an upbeat mood across markets, equities in Europe rose, Brent crude prices jumped to $116.2 per barrel and iron ore futures gained.

"Global growth expectations will head lower, but we anticipate that China's economy will rebound in 2H22," Phoenix Kalen, global head of emerging markets research at Societe Generale, wrote in a note.

"Notwithstanding significant downside risks, our central scenario for global growth over the next several years is relatively benign, envisioning a deceleration in DM and a mild improvement/stabilisation in EM growth."

However, currencies of countries reliant on oil imports weakened. The Indian rupee INR=IN hit a record low to trade at 78.76 per dollar, with intermittent dollar selling by the central bank helping limit losses.

The Turkish lira TRYTOM=D3 slipped to trade at 16.63 per dollar, about 5% away from the year's low it hit last week.

Overall, the MSCI's EM currencies index .MIEM00000CUS looked set to post its worst quarterly performance since March 2020 when the coronavirus pandemic wreaked havoc on financial markets.

"We anticipate further weakness in EM FX spot performance, with mild deterioration in 3Q22 and a turn-around toward stronger performance before end-2022," added SocGen's Kalen.

Among central European currencies, the Hungarian forint EURHUF= recovered slightly after hitting a record low against the euro in the previous session on worries about soaring inflation and the absence of a deal with Brussels on the release of frozen European Union funds.

The central bank is expected to raise interest rates by another 50 basis points to 6.4% later on Tuesday, with more hikes to come this year, as per a Reuters poll of economists.

"HUF weakness has triggered some revision of expectations...a sizeable minority have switched to expecting a 100bp hike instead," Commerzbank strategists wrote in a note.

"This means that, if MNB were to simply ignore such expectations and hike by 50bp, there could be immediate further pressure on HUF."

For GRAPHIC on emerging market FX performance in 2022, see Link For GRAPHIC on MSCI emerging index performance in 2022, see Link

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see
Reporting by Sruthi Shankar in Bengaluru; Editing by Krishna Chandra Eluri

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