An emerging market currency gauge surged to an all-time high in Asian trade on Wednesday and regional equities reached multi-week peaks as hopes of easing U.S.-Iran tensions kept oil prices under $80.
MSCI's broad index of emerging currencies rose as much as 0.4% to an all-time high, while the EM Asia equities index gained 2.5% to a two-week high.
Crude futures rose $1 a barrel following steep declines in the last two sessions, as markets looked for signs of progress in ending the five-month-old U.S.-Iran conflict and potentially restoring traffic through the key Strait of Hormuz.
"Lower oil prices are a clear positive for most emerging Asian markets because the region is largely a net energy importer," said Glenn Yin, director of research at ACCM Official.
"Cheaper energy eases inflation pressures, supports corporate margins, and reduces pressure on regional central banks, creating a more favourable backdrop for both equities and currencies."
Indonesia's rupiah was among the major gainers in the region, strengthening 0.5% to trade at 17,920 per U.S. dollar.
The Philippine peso, South Korea's won and Taiwan's dollar advanced between 0.3% and 0.5%.
The Malaysian ringgit and Singapore dollar remained little changed on the day.
The Indian rupee briefly appreciated past the key 95-mark before paring gains. The Reserve Bank of India left its benchmark repo rate unchanged as expected, with policymakers looking for clearer evidence on whether rising oil prices were fuelling broader inflationary pressures. The currency was last trading at 95.135 a dollar.
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