EM currency gauge hits fresh session high as oil extends plunge

Most emerging-market currencies posted gains in afternoon trading as oil prices retreated and the U.S. dollar weakened following remarks by President Donald Trump suggesting a potential de-escalation in the conflict with Iran. A Bloomberg gauge tracking emerging-market currencies rose as much as 0.2% after earlier slipping 0.8%, with the Brazilian real surging 1.6% and the South African rand climbing 1.5% against the dollar according to market data. The moves came as Brent crude prices fell below $90 per barrel, reversing an earlier spike to nearly $120, amid Trump's assertion that the military operation was "very far" ahead of its initial timeline and nearing its objectives as reported.

Equity markets also showed signs of stabilization, with the Vanguard FTSE Emerging Markets ETF hitting session highs and the MSCI EM Latam Index rising 1.5%. However, the Asia-focused MSCI Emerging Markets index remained down about 3% in New York trading, having earlier dropped as much as 4.3%, raising concerns of a potential 10% correction. In the U.S., the S&P 500 rebounded 0.8% after earlier losses, while Brent crude's decline reflected reduced fears of prolonged supply disruptions. Analysts noted that Trump's comments eased pressure on oil markets and boosted risk appetite, though concerns over inflation and rate-cut expectations lingered. JPMorgan and others warned that prolonged volatility could test equity markets further, particularly if energy prices remain elevated according to financial analysis. The interplay between geopolitical developments and commodity markets continues to shape emerging-market dynamics.