Oil Diverges From Emerging-Market Currencies by Most on Record

The Iran war has not just broken a decades-long relationship between crude oil and emerging-market currencies, it has pushed it into reverse, with their correlation turning the most negative in at least 27 years.

Brent crude futures are surging the most since 2020 amid an energy-supply shock sparked by the Middle Eastern conflict. Meanwhile, the MSCI EM Currency Index is heading for its worst monthly losses since late 2024. That’s sent their 120-day rolling correlation to minus 0.34, the most divergent in data going back to 1999.