Emerging-market currencies recovered from earlier losses on Monday as oil prices retreated, providing relief to an asset class that had been under significant pressure. The pullback in crude prices helped ease broader risk-off sentiment across developing economies. The deadline for a potential US blockade of the Strait of Hormuz to come into effect passed without incident, removing a key geopolitical threat that had been weighing on investor sentiment.

Currency markets across Asia and Latin America stabilized as the immediate tension surrounding the strategic waterway eased. Traders had been bracing for potential disruption to global oil flows through the chokepoint, which handles roughly a fifth of the world's crude shipments. The removal of this uncertainty—combined with lower oil prices—allowed risk appetite to return to EM assets. Oil prices had climbed in recent sessions on supply concerns before reversing course, giving emerging-market currencies room to pare their declines.