The rand lost ground after a report that Iran had stopped exchanging messages with the US.

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Emerging-market (EM) currencies, including the rand, sank on waning hopes for a peace deal in the Middle East after a report that Iran had stopped exchanging messages with the US in protest at Israel’s actions in Lebanon.

MSCI’s gauge tracking currencies in the developing world erased modest gains and was down 0.1% on Monday. Oil surged and the dollar jumped to a daily high following the Tasnim report, which stated that the Iranian negotiating team will suspend “talks and the exchange of documents through mediators.”

READ | US not trustworthy, says Iran negotiator, as Trump demands ‘no nuclear weapons’

The slump follows eight days of gains, snapping the index’s longest winning streak since July 2024.

The rand had started the day strong, moving to R16.19 against the dollar before weakening to R16.38, a loss of more than 1% for the day.

“The news has certainly taken a toll on market hopes for a resolution on the conflict, weighing on the risk sentiment towards EM,” said Dan Pan, Americas economist at Standard Chartered Bank in New York.

Fresh data out of the US may add to the pressure. Figures showing manufacturing activity expanded in May at the fastest pace in four years support a more restrictive Fed policy and firmer dollar, according to Elias Haddad, global head of markets strategy at Brown Brothers Harriman.

While nearly all emerging-market currencies fell, Colombia’s peso was an outlier, advancing more than 3%. Bonds and stocks in the country also rallied on Monday after right-wing outsider Abelardo de La Espriella unexpectedly won the first round of voting for the presidency and went into the runoff as a clear favourite against leftist Ivan Cepeda.

De la Espriella’s strong showing is cementing bets on a regime change, after four years under President Gustavo Petro.

Meanwhile, a barometer tracking emerging-market stocks surged to a fresh record, propelled by continuing enthusiasm for the artificial intelligence trade that’s bolstered global equities despite the Iran war.

A solid earnings season and confident outlooks have fueled the tech rally, with an index of emerging-market info-tech companies on track for its best quarter in nearly 25 years.

The rally “is durable and sustainable as long as earnings continue to deliver,” said Geoffrey Yu, a senior strategist at BNY Mellon, adding that rising inflation driven by supply factors may not directly affect the performance of AI companies.

However, the JSE ended the day about 2% lower, dragged down by mining companies losing market value, led by Pan African Resources, which was down 15%, and AngloGold Ashanti and Gold Fields both down about 6%.

Additional reporting by News24.