EMERGING MARKETS-Recession woes, soaring dollar pummel EM currencies

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EM Currencies at their lowest level since May 2020

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China's onshore yuan hits lowest since global financial crisis

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India's inclusion in JP Morgan's EM debt index delayed - sources

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EBRD hikes Turkey's growth view to 4.5% for 2022

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Russian stocks extend recovery, rouble eases

By Bansari Mayur Kamdar

Sept 28 (Reuters) - Currencies of emerging economies dropped to their lowest level in nearly 28 months on Wednesday, as fears of a more aggressive U.S. Federal Reserve and a global economic slowdown sent investors into the arms of the safe-haven dollar.

The MSCI's index for emerging market currencies fell 0.9% at 0847 GMT as the dollar hit a fresh two-decade peak against a basket of currencies.

"It's another day of souring risk sentiment and we see that being reflected in the EM currencies, partly driven lower by a rise in the U.S. long-term yields... The markets are clearly worried that the U.S. will go into a recession and with that the global economy," said Per Hammarlund, Chief EM Strategist at SEB.

"The only thing that could change this is that we are potentially seeing signs that the dollar might be peaking and then we could have a bit of a temporary recovery in EM currencies."

China's onshore yuan fell to its weakest level since the global financial crisis of 2008, while the offshore trades hit a record low, even as China's central bank announced fresh steps this week making it more expensive to bet against the currency.

A source also told Reuters on Tuesday that Chinese monetary authorities were asking local banks to revive a yuan fixing tool as they seek to steer and defend the rapidly weakening currency.

Stocks in Shanghai declined 1.6%, while equities in the broader emerging market shed 2.0%.

Russian stocks extended their recovery amid volatile trading sparked by President Vladimir Putin's mobilisation order, while the rouble eased against the dollar.

The Turkish lira was down 0.2% after hitting a record low in the previous session.

The European Bank for Reconstruction and Development (EBRD) said Turkey's economy was expected to grow at a 4.5% rate this year, raising its 2.0% forecast of six months ago in a nod to robust consumption in the face of inflation.

South Africa's rand shed 0.8% against the dollar.

Central and Eastern European currencies were mixed against the euro, with the Hungarian forint declining 1% a day after its massive 125 basis point hike.

The Indian rupee was rooted at all-time lows, with traders suspecting that intervention by the Reserve Bank of India was keeping the currency from weakening further.

India's long wait to win inclusion in JPMorgan's emerging market debt index was set to be pushed out into next year due to a number of issues New Delhi needed to address, sources said. For GRAPHIC on emerging market FX performance in 2022, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2022, see https://tmsnrt.rs/2OusNdX

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For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see (Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Alex Richardson)