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Emerging market stocks rebound past pre-war levels on AI optimism; currencies remain weakEmerging market stocks rebound on AI optimism and easing Iran tensions, led by Asia tech, while EM currencies fall as dollar strengthens and oil prices rise.By Gareema Bangad  April 20, 2026, 10:34:13 AM IST (Published)2 Min ReadEmerging-market equities recovered losses triggered by the Iran conflict, supported by gains in Asian markets amid optimism around artificial intelligence and expectations of easing geopolitical tensions.

The MSCI Emerging Markets Index rose as much as 0.9% on Monday, April 20, moving above its February 27 level, just before US and Israeli strikes on Iran, Bloomberg reported.

In contrast, emerging-market currencies weakened against a stronger US dollar and rising oil prices. The Bloomberg Asia Dollar Index fell as much as 0.3%, its steepest drop in over two weeks.

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The divergence between equities and currencies reflects differing investor views on the trajectory of the conflict. Equity markets are pricing in the possibility of a peace deal and resilience in technology stocks.

In contrast, currency markets remain focused on the dollar’s safe-haven appeal and the inflationary impact of higher energy prices.

“Markets are still in ‘the worst is over’ mode,” Rajat Bhattacharya of Standard Chartered Bank said. “EM stocks are largely tech-driven. Tech is seen more as a defensive sector amid the AI wave, which is relatively immune to the macro impact of higher for longer oil.”

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Asian markets have led the rebound in EM equities, with countries such as South Korea and Taiwan already recovering losses in recent weeks.

On the currency front, the South Korean won led declines, falling as much as 1.5% against the dollar, its biggest drop in over a month. Other regional currencies, including the Thai baht and Malaysian ringgit, also weakened.

“This underscores the fluidity of geopolitical developments and continues to argue for two-way trades,” Christopher Wong of Oversea-Chinese Banking Corp. said.Continue ReadingTagsAsia MSCi indexemerging market EMglobal marketsshare market todaySouth Korea