The Turkish lira and the Russian ruble are surging today, gaining 2.2% and 1.7%, respectively, against the U.S. dollar.

Lee Hardman, a currency analyst at Bank of Tokyo-Mitsubishi UFJ, gives a brief summary of the factors driving today's moves in a note to the firm's clients this morning:

Investor concerns over the threat posed by escalating geopolitical tensions related to developments in Ukraine have also continued to ease in the near term after U.S. Secretary of State Kerry and Russian Foreign Minister Lavrov met yesterday in Paris, with further talks also expected to seek an acceptable outcome to Ukraine. According to Interfax news service, Russian Foreign Minister Lavrov stated that he was in agreement with Kerry on "the need to seek common ground on the diplomatic path for an exit from this situation that will meet the interests of the Ukrainian people." Russia wants Ukraine to grant greater powers to its regions, have a non-aligned status outside NATO, and make Russian an official second language. U.S. Secretary of State Kerry stated that "any real progress in the Ukraine must include a pullback of very large Russian force that is currently massing along the Ukraine's borders."

Elsewhere, the Turkish lira has strengthened sharply overnight after the local election results over the weekend, which provided a vote of confidence in PM Erdogan and the ruling AKP party, supporting political stability in Turkey. The AKP party has reportedly won 46% of the votes and is set to retain control of Istanbul.

More broadly, global emerging markets are rallying after a rough start to 2014.

The MSCI Emerging Markets equity index closed Friday at its highest level since January 2. Meanwhile, JPMorgan's Emerging Markets Currency Index has regained all of the ground it lost since January 15, and the JPMorgan EMBI Total Return Index, comprised of EM sovereign debt, has rallied to its highest level since June 2013.

"Our conversations with investors show a willingness to engage in EM markets that is much stronger now than at any time since the sell-off last summer," says Manoj Pradhan, an economist at Morgan Stanley, in a note to clients.

"Interestingly, it is global investors (who had withdrawn from investing in EM as much as they could) who have been most enthusiastic, while EM-dedicated investors (who have had to stay engaged) remain cautious. It seems most likely to us that many investors feel that they cannot remain on the sidelines — what our strategists would call being 'squeezed in'."

Pradhan attributes the recent outperformance in emerging markets to various developments, including heightened hopes for additional economic stimulus from Chinese authorities, a de-escalation of tensions between Russia and Ukraine, and optimism in Brazil following a recent sovereign downgrade by credit rating agency S&P.

"Our worry is that many investors feel that EM has adjusted adequately and may mistake the near-term stabilising factors we list above for a more fundamental, longer-term turning point in EM fortunes," he says.

"Should the rally continue, it will likely weaken two key channels of change in EM: i) The incentive of policy-makers, who usually act when pushed to the brink, to introduce reforms; and ii) The ability of asset prices to create an economic rebalancing and generate sustainable sources of growth."

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