EMERGING MARKETS-EM FX steady, stocks uneven as focus remains on Iran peace deal, Indonesian assets

Emerging market currencies edged higher on ‌Wednesday ​while stocks traded in a mixed fashion as investors assessed prospects of a Middle East peace deal, with oil-import-dependent Indonesia attempting to tackle the energy price shock. Indonesian President Prabowo Subianto said his government will centralise exports of key commodities ‌in an effort to boost state revenues and tighten the country's grip over its abundant natural resources.

Emerging market currencies edged higher on ‌Wednesday ​while stocks traded in a mixed fashion as investors assessed prospects of a Middle East peace deal, with oil-import-dependent Indonesia attempting to tackle the energy price shock.

Indonesian President Prabowo Subianto said his government will centralise exports of key commodities ‌in an effort to boost state revenues and tighten the country's grip over its abundant natural resources. The world's largest exporter of thermal coal and palm oil has been grappling with surging energy import costs, with the rupiah at record lows, last trading at 17,600 versus the dollar and local stocks down 0.7% on the day.

Indonesia's central bank ‌delivered a surprise 50-basis-point rate hike — its first in two years. "We doubt today's rate hike will mark the start of an aggressive tightening cycle; the ‌Board probably opted to go big so it would have to hike—"preemptively"—only once," said Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics.

"Our house view is that more Fed easing is still in the pipeline, likely resuming in the fourth quarter of this year." South Korea's benchmark KOSPI fell 0.9% as investors booked profits. Samsung Electronics closed slightly higher as markets assessed the chances of a workers' strike ⁠at the ​chip giant.

Declines in Asian bourses weighed on ⁠MSCI's global EM stocks gauge down 0.3%. Equities in Hungary fell 0.5%. Shares in Poland and Romania were up 0.3% and 0.4%, respectively. MSCI's EM currency gauge was up 0.1% on the day. Most currencies ⁠in emerging Europe were subdued against the euro and Hungary's forint depreciated 0.4%.

Meanwhile, U.S. President Donald Trump said on Tuesday the Iran war would be over "very quickly", while Vice President ​JD Vance talked up progress in talks with Tehran about an agreement to end hostilities. Shipping data showed that two Chinese tankers with oil exited the ⁠Strait of Hormuz on Wednesday, nudging oil prices slightly lower.

Turkish stocks gained 0.2%, while its lira was little changed. South Africa's rand appreciated 0.3% and its stocks gained 0.5%, helped by gold miners, despite a ⁠fall ​in bullion prices. Headline inflation in the African country quickened to 4% year-on-year in April from 3.1% in March. It joins a host of countries that have seen price pressures accelerate due to expensive fuel stemming from the Iran conflict.

This has led to a repricing of interest rate expectations across global economies, and sparked ⁠a selloff in bonds across the world, raising yields and dampening appetite for risk assets. Some bonds in countries like the United Arab Emirates and Saudi Arabia suffered. ⁠Saudi Arabia's 2032 and 2046 maturities, among ⁠others, were trading at levels last seen on March 23, their lowest point since the Iran war broke out.

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