EMERGING MARKETS-Iran ceasefire hopes lift EM stocks for second day; Tehran's denial keeps FX wary
By Pranav Kashyap
March 25 (Reuters) - Emerging market equities extended their rebound for a second straight session on Wednesday as investors parsed reports that Washington is seeking a month-long ceasefire with Iran in a conflict that has rattled global markets for four weeks.
U.S. President Donald Trump said talks with Iran were progressing but Tehran denied direct negotiations were underway, a contradiction that kept investors on edge and was reflected in an emerging market currencies' gauge .MIEM00000CUS that traded flat.
MSCI's benchmark index for emerging market stocks .MSCIEF rose 1.5%, building on what had been its best single-day gain in over two weeks on Tuesday.
The war has sent governments scrambling to shield citizens from the energy supply shock with spiking crude prices beginning to leave their mark on the broader economy.
Stocks in Manila .PSI and Mumbai .BSESN climbed to near one-week highs. Philippines declared a state of national energy emergency, while India put brewers on notice of an impending gas shortage that threatens to drive up the cost of glass bottles.
Shipping delays are also squeezing imports of aluminium needed by can makers.
"The macro outlook remains volatile, and the Strait of Hormuz resolution and cooling down of oil and gas prices are the sole driver for Indian energy stocks," Emkay Global's Sabri Hazarika said.
In Europe, Hungary's forint EURHUF= clawed back from a two-week low against the euro hit on Tuesday, after the central bank held interest rates steady even as it revised its inflation outlook upward, with surging energy prices and a national election on April 12 adding uncertainty.
Equities in Athens .ATG fell 2.1%, a day after the International Monetary Fund trimmed its 2026 growth forecast for Greece from 2% to 1.8%.
On the broader front, equities in central and eastern Europe .MIME00000PUS, a region still dependent on Middle East oil, were set for their worst month since October 2024.
Central banks across emerging markets are scrambling to assess the war's fallout. Sri Lanka became the latest to hold rates steady, joining a growing chorus of central banks, including Hungary's and Chile's, opting for caution over action. Rate decisions from South Africa, Russia, and Mexico are all due later in the week.
The rand ZAR= edged marginally lower, while the rouble RUB= held flat.
