Most emerging market currencies strengthened on Wednesday, buoyed by a weakening dollar, while investors awaited developments in the Middle East following U.S. President Donald Trump's comments on Gaza.
Trump stated that the U.S. would take over war-torn Gaza and establish a "Riviera of the Middle East" after relocating Palestinians elsewhere. This declaration drew criticism from influential regional players such as Saudi Arabia and Turkey.
The Israeli shekel remained stable in early European trading, while Tel Aviv stocks rose by 0.8%.
International bonds issued in Israel showed little change, while sovereign bonds in Lebanon and Egypt remained largely unchanged.
MSCI's index tracking global emerging market currencies climbed 0.2%, reaching near two-week highs. The stocks gauge gained 0.4%, hitting its highest levels since December.
The dollar index dipped 0.4%, benefiting emerging market currencies as investors capitalized on the relief following Trump's suspension of tariffs on Mexico and Canada on Monday, easing trade tensions in North America.
China, which was not exempt from the tariffs, retaliated with countermeasures on some U.S. imports and tightened its control over mineral exports on Tuesday.
Chinese stocks closed lower on the first trading day after a long holiday, and the onshore yuan fell 0.5%. Trump indicated on Tuesday that he was in "no hurry" to engage with the Chinese President to attempt to defuse a new trade war.
Most emerging European currencies remained subdued against the euro, including the Polish zloty ahead of a local monetary policy decision, where the central bank is widely expected to maintain rates.
The Russian ruble surged 2.2% against the dollar, after declining for three consecutive sessions, according to over-the-counter data.
South Africa's rand rose 0.3%, while its main stock index gained 0.3%, ahead of the President's annual State of the Nation Address.
An interest rate decision in Kenya is also anticipated.