On April 22, the MSCI index of emerging-market currencies dropped 0.3%, its worst single-day performance in more than a week. The driver was a familiar one: stalled diplomatic talks between the US and Iran, paired with heightened military activity near the Strait of Hormuz, pushed oil prices back above $100 per barrel.
The mechanics of the pain
Countries that import most of their energy, a category that covers a large share of Eastern Europe, South and Southeast Asia, and sub-Saharan Africa, get hit from two directions at once when crude rallies. Energy import bills climb, widening trade deficits. Those deficits put downward pressure on local currencies. A weaker currency then makes those same energy imports even more expensive in local terms.
Eastern European currencies led the decline on April 22, reflecting the region’s particular vulnerability to energy price shocks.
The other side of the trade
The Chilean peso and the Colombian peso each gained roughly 0.6% on April 22. Chile’s situation is slightly more nuanced because copper prices, which also rose, play a larger role in its export revenues than crude oil does. Colombia, a meaningful oil exporter, benefited more directly from the price move.
What is driving the oil spike
The immediate catalyst is the state of US-Iran negotiations, which have been grinding through a cycle of optimism and breakdown throughout 2026. When talks appear to progress, oil pulls back. When they stall or military activity picks up near the Strait of Hormuz, crude jumps.
In 2026, oil has at times rallied more than 4% in a single session on escalation fears, then given back those gains when diplomatic signals improved.
What this means for investors across asset classes
For investors with exposure to emerging-market equities or local-currency bonds, the near-term picture is uncomfortable. High energy costs feed directly into inflation, which pressures central banks to keep monetary policy tighter than growth conditions would otherwise call for.
Crypto markets were not immune to the April 22 risk-off move. The total crypto market cap declined by 1.24% during the session, consistent with the broader pattern of digital assets selling off alongside other risk assets when geopolitical uncertainty spikes.
