Most emerging-market currencies weakened on Tuesday as overnight clashes near the Strait of Hormuz offset signs of progress toward a US-Iran peace deal, even as developing-nation stocks rose on optimism around artificial intelligence.
MSCI’s EMFX gauge was little changed overall, though most developing-world currencies fell. South Africa’s rand, seen as a benchmark for risk appetite due to its strong liquidity, was among the worst performers.
The latest military action highlighted the tension between the US and Iran, hours after US President Donald Trump said negotiations with Tehran to extend their ceasefire and reopen the strait are proceeding. Secretary of State Marco Rubio added Tuesday that a deal would likely take a few days to finalize. Oil rebounded after falling on Monday.
“The confusion is part of the story,” said Juan Perez, director of trading at Monex USA. “Are markets optimistic or not? It changes every hour.”
Meanwhile, an index for emerging-market stocks climbed for a fourth day, rising 0.5%, lifted by Asian shares. South Korea’s Kospi index jumped about 2.6% to a record, while Hong Kong stocks advanced as markets reopened after Monday’s holiday.
Taiwan overtook India in stock market value, driven by a rally in the world’s largest chipmaker Taiwan Semiconductor Manufacturing Co. and growing AI optimism.
The continued rise in Asian shares after a long weekend in several markets came despite uncertainty over the next phase in US-Iran talks.
According to Karen Ward, JPMorgan Asset Management’s EMEA chief market strategist, global investors are focused beyond the current geopolitical concerns on the investment opportunities that may come from increased public, military and corporate spending across the world.
“The more chaotic the world becomes, the more that’s creating spending,” Ward told Bloomberg’s Francine Lacqua. “That’s really what markets are focused on. Whatever happens in the next month or two, there’s a much bigger theme that’s at play.”
At the same time, the mounting inflation pressures fueled by the Iran war spurred Sri Lanka’s central bank to raise its benchmark rate by a full percentage point — its first monetary tightening in three years.
Meanwhile, Hungary’s central bank decided to maintain the benchmark rate at 6.25% in a split decision.
In debt markets, the Federation of Bosnia and Herzegovina, the Muslim-Croat entity within the Balkan nation, mandated banks for a roadshow, with a potential benchmark 5-year euro-denominated benchmark sale to follow.
In Africa, Senegal’s dollar-denominated bonds fell as investors weighed the appointment of an ex-central banker as prime minister amid a deepening political standoff.
Elsewhere, Bolivian sovereign bonds are in free-fall, dropping for a 10th day, as protests and road blockades choke off essential supplies to La Paz and lead to violent clashes.
With assistance from Carolina Wilson.
This article was generated from an automated news agency feed without modifications to text.
