July 21 (Reuters) – South Africa’s rand led losses across emerging market currencies on Wednesday as commodity prices retreated, while stocks extended declines into a fourth session as the virus-driven risk-off sentiment persisted.

The rand fell 0.8% and was the worst performer in Europe, Middle East and Africa (EMEA), as a drop in iron ore, base metal and gold prices added to pressure from broader weakness in sentiment.

Easing June inflation data also pointed to the South African central bank standing pat on interest rates at its Thursday meeting. The country’s benchmark lending rate currently stands at a record-low 3.5%.

High-yielding currencies such as the rand tend to demonstrate bigger swings in response to changing sentiment.

In broader emerging markets (EM), MSCI’s index of currencies extended losses into a fourth straight day. While the pace of losses appeared to be slowing, EMs remained under pressure from concerns over the Delta COVID variant.

The dollar continued to rise on safe-haven demand.

MSCI’s index of EM stocks fell 0.2%, extending losses into a fourth straight session. The index has lost nearly 3% over the past three days, and has nearly lost all of its gains so far this year.

Most bourses in EMEA rose on Wednesday. A bulk of the index’s losses came from Asia, where rising cases of the Delta variant eroded sentiment.

But some analysts said the recent losses in EM stocks could make them attractive for bargain buys, especially if a vaccine-led economic recovery picks up steam this year.

“Given the combination of tailwinds and relatively appealing valuations, we expect the MSCI Emerging Markets index to gain around 10% by the end of December and 14% by June 2022, outperforming global equities,” Mark Haefele, chief investment officer Global Wealth Management, UBS, wrote in a note.

Haefele added that if the current rate of vaccinations in EMs is to continue, the median rate of vaccinations in EM by the year-end would be about 65% of the population.

Russia’s rouble fell 0.3%, tracking losses in oil prices. Crude prices were hit by a surprise rise in U.S. oil inventories, as well as concerns over waning demand due to COVID-19.

Central European currencies retreated against the euro and dollar.

For GRAPHIC on emerging market FX performance in 2021, see http://tmsnrt.rs/2egbfVh

For GRAPHIC on MSCI emerging index performance in 2021, see https://tmsnrt.rs/2OusNdX

(Reporting by Ambar Warrick)