(Bloomberg) — Emerging-market stocks and currencies gained on the week as investors grew increasingly hopeful that the US and Iran are moving closer to a peace deal.

MSCI’s EM currency gauge was little changed Friday, eeking out a gain of 0.05% over the week. The Colombian peso and the Indian rupee outperformed on Friday. 

Appetite for riskier assets has picked up in recent days on hopes that turmoil in the Middle East will ease. On Friday, Pakistan’s army chief, the favored interlocutor between Washington and Tehran, arrived in the Iranian capital amid signals of progress in talks to end the war. Plus, the United Arab Emirates joined Saudi Arabia and Qatar in urging US President Donald Trump to give negotiations a chance.

“All the major players are making a big push for some sort of peace deal,” said Win Thin, chief economist at Bank of Nassau 1982. “While the timing of a deal is total guesswork, none of us should be surprised by positive headlines emerging today and through the weekend.”

At the same time, some hawkish signals are coming from the Federal Reserve. Governor Christopher Waller supports making clear that the central bank’s next interest-rate move is just as likely to be an increase as a cut, adding that his current position is to be patient in holding rates until the war’s impact is clearer. During a White House ceremony to swear in Kevin Warsh as Federal Reserve chairman, Trump said he wants Warsh to be “totally independent.”

MSCI Inc.’s Emerging Markets Equity Index rose 0.6% on Friday, closing the week 0.8% higher. Demand has remained strong for shares of emerging-market companies, mainly in Asia, that stand to benefit from the AI boom.

“It’s all about technology,” said Guy Miller, chief markets strategist at Zurich Insurance. “Investors are thinking that here is a story that can be played for a bit longer — the demand for semiconductors and the supply of them.”

Selling pressure in Turkish stocks eased after Thursday’s selloff, which was sparked by a Turkish court decision to remove the leadership of the country’s main opposition party. Dollar bonds rebounded Friday, outperforming in emerging markets. Still, the lira was among the biggest decliners in EM, even after the central bank sold some $6 billion on Thursday to defend the currency.

The South Korean won also fell, with officials saying the currency’s decline had become excessive and pledging decisive action if needed. Philippine central bank Governor Eli Remolona, meanwhile, said a peso level of 63.50 per dollar may be acceptable as long as the depreciation remains orderly and does not fuel inflation.

Elsewhere, Ukraine’s dollar bonds maturing in 2029 jumped to a record high of 84 cents on the dollar Friday as the country and its allies grew increasingly confident that Russia’s invasion is running out of steam.

Bolivian foreign-currency debt underperformed again amid escalating road blockades that led to both police and civilian deaths. The notes have fallen for nine straight sessions as protests imperil new President Rodrigo Paz’s pro-market agenda.

–With assistance from Sujata Rao.

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