EMERGING MARKETS-FX subdued, Turkish lira at record low with focus on cabinet appointments

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China's yuan weakens ahead of manufacturing data

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Turkey's Erdogan to speak at 1100 GMT

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Lira at fresh record low, Turkey's stocks up

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Nigeria dollar bonds rise

By Amruta Khandekar and Siddarth S

May 30 (Reuters) - Emerging market currencies were subdued on Tuesday with China's yuan hovering near a six-month low, while the Turkish lira hit an all-time low as focus shifted to President Tayyip Erdogan's monetary policy plans following his election win.

MSCI's EM currencies index fell 0.1% by 0837 GMT, with China's yuan down 0.2% against the dollar.

China's factory activity is expected to have contracted further in May, adding to pressures facing the world's second-biggest economy amid an uneven economic recovery from the COVID pandemic. The data is due to be released on Wednesday.

The Turkish lira weakened over 1% to an all-time low of 20.34 against the dollar after Erdogan won Sunday's presidential election runoff, extending his rule to the third decade.

The currency has shed more than 90% over the last decade amid bouts of soaring inflation, triggered by Erdogan's unorthodox policy of cutting interest rates which has also put off foreign investors.

With Erdogan due to speak at 1100 GMT, market focus is now on whether he could now signal a shift to a more orthodox monetary policy and who he could appoint to the cabinet to run the country's economic policy.

"My personal belief is now that the election is out of the way, we will indeed see a policy shift simply because the current path is absolutely unsustainable. My bigger question is what's the magnitude (of the shift)?," said Elliot Hentov, head of macro policy research at State Street Global Advisors.

"The economy needs some harsh medicine and the question is, how much is he (Erdogan) willing to administer at this stage?"

Turkey's sovereign bonds rose as much as 1.6 cents on the dollar, while banking stocks jumped as much as 8.7%.

The Turkish central bank's net international reserves dropped more than $2 billion in the week to May 26, according to bankers.

South Africa's rand weakened 0.4% against the dollar and hovered near record lows hit last week after a jumbo 50-basis-point rate hike by the country's central bank failed to impress investors.

Data on Tuesday showed the country's private sector credit grew 7.07% year on year in April after rising by 7.19% in March.

Emerging market stocks rose 0.2%, with market sentiment lifted after a deal to temporarily suspend the U.S. debt ceiling was announced over the weekend though concerns lingered the agreement could face a rocky path through Congress.

Elsewhere, the International Monetary Fund (IMF) has continued its engagement with Pakistani authorities to pave the way for a board meeting before the current program expires at end of June, the IMF mission chief for Pakistan said.

Nigeria's sovereign dollar-denominated bonds rose on Tuesday after new President Bola Tinubu said at his swearing in on Monday that a costly fuel subsidy would be removed and the central bank should work towards a unified exchange rate.

For GRAPHIC on emerging market FX performance in 2023, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2023, see https://tmsnrt.rs/2OusNdX

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