The rand has gained against a weak dollar, reaching R16.19/$ on Tuesday morning before falling back slightly to R16.21 by 14:00.

• For more financial news, visit News24 Business.

Most emerging-market currencies advanced outside Asia as hopes of a deal in the Middle East drove oil prices lower and boosted risk sentiment.

The rand led gains as Reserve Bank Governor Lesetja Kganyago promised that officials would lower inflation back to its 3% target. The Hungarian forint and the Mexican peso also strengthened.

“Diplomatic efforts to ease tensions in the Middle East improved market sentiment,” said Piotr Matys, a strategist at In Touch Capital Markets.

He also cited Kganyago’s comments as supporting the rand. South Africa last week raised borrowing costs by 25 basis points to 7%, delivering the first rate increase in three years as inflationary pressures intensified after the start of the Iran war.

READ | Kganyago: I will not snatch defeat from the jaws of victory

In Asia, China’s yuan climbed to its highest in nearly four years versus a basket of trading partner currencies. The MSCI EM currency index edged 0.2% lower.

On the continent, Zambia’s 2053 dollar bond, which the government is trying to buy back, gained to trade around 81 cents to the dollar. That’s a post-restructuring high and implies a greater value than the country’s current cash offer price. A group of holders of the bonds is opposing the government’s tender to buy back the securities.

In equities, stocks advanced for the third day on the back of a rally fuelled by Asian technology stocks. The MSCI index rose 0.9% on Tuesday for a three-day gain of 3.7%.

“Generally, political jawboning tied to the Iran war continues to whipsaw markets,” said Elias Haddad at Brown Brothers Harriman & Co. “Strength in EMEA currencies likely reflects the pullback in crude oil prices.”

The rand strengthened to R16.19 against the dollar on Tuesday morning, after a weaker Monday in which it reached R16.38. It has strengthened 1.2% from worst to best levels in the 24 hours.

With additional reporting by News24.