Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Turkish Lira Drops as Rate Policy Takes Priority Over U.S. Vote

ForexNov 04, 2020 11:45
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Bloomberg. Daily exchange rates of Turkish lira, U.S. dollar and euros on an electronic board at a currency exchange in Istanbul, Turkey, on Wednesday, Nov. 4, 2020. The prospect of a Joe Biden victory in the U.S. election is additionally rattling lira traders already concerned over Turkey's widening current-account deficit, dwindling foreign reserves, geopolitical tensions and rising Covid-19 infections. 2/2

(Bloomberg) -- The Turkish lira resumed its drop as early presidential election results in the U.S. pointed to a closer race than polls had predicted, while traders focused on the prospects for a local interest-rate hike.

The lira joined the retreat among emerging currencies, falling as much as 1.5% to 8.5253 per dollar, its ninth loss in 10 days, before paring the slide to 0.3%. That offset the gains of the previous day, when speculation about a possible interest-rate increase lifted the Turkish currency.

While investors have argued that a win for Donald Trump would help the lira by easing the chance of sanctions against Ankara, the currency was still among the worst performers in emerging markets on Wednesday, even with the incumbent still firmly in the race. Traders are more concerned about the direction of central bank policy, analysts said.

“The market views a Trump victory as mildly supportive -- or less negative -- than a Biden win for the lira,” said Nigel Rendell, a senior analyst at Medley Global Advisors in London. “But the currency dynamics are not being driven by political outcomes thousands of miles away, but by policy inactions by the central bank in Ankara.”

Investors have called for an emergency rate move after policy makers unexpectedly kept rates on hold last month. Measures to tighten liquidity and rates in the repo market without explicitly hiking the benchmark have failed to stem the lira’s decline as geopolitical pressures mounted.

A win for Trump, who has opposed Congressional sanctions against Turkey over the purchase of a Russian missile system, would be a relief for some Turkish assets. Democratic candidate Joe Biden has been critical of the Turkish government, and would probably take a tougher stance than Trump.

The Real Reason Turkey Is Mad at Joe Biden: Bobby Ghosh

“A strong and imminent rate hike from central bank, considering the inflation trend and balance in domestic market, would break the downward trend, regardless of U.S. elections,” Onur Ilgen, an Istanbul-based treasury manager at MUFG Bank Turkey AS, said. “Indecisive central bank moves might further hurt investors’ confidence and open a path for new record lows, no matter what the result of the elections would be.”

Flashback to 2018 Lira Crisis Fuels Calls for Emergency Hike

©2020 Bloomberg L.P.

Turkish Lira Drops as Rate Policy Takes Priority Over U.S. Vote
 

Related Articles

Bitcoin tumbles 5.5% to $53,436
Bitcoin tumbles 5.5% to $53,436 By Reuters - Dec 03, 2021

(Reuters) - Bitcoin plunged 5.5% to $53,435.9 at 22:04 GMT on Friday, losing $3,112.06 from its previous close. Bitcoin, the world's biggest and best-known cryptocurrency, is...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email