EM: TRY Falls On China As Markets Shrug Off Blast

The Turkish lira hit its weakest against the dollar since September on Tuesday as emerging markets took another hit from China’s economic slowdown.

The local currency briefly dipped further following news of an explosion in central Istanbul before recovering some ground as investors tried to assess the implications of the blast, which killed at least 10 people.

The main BIST 100 share index also turned negative after the attack before regaining some ground and was flat at 71.054.14.

One trader said Tuesday’s explosion was not on the scale of the Ankara bombing in October, which killed more than 100 people, “so after the initial reaction the lira traded in line with emerging markets”.

Negative emerging market sentiment overshadowed yesterday’s current account data, which showed the deficit continued to narrow in November.

“This current-account behaviour, by itself, would have been a significant positive for the lira, but in today’s broader EM environment, it has become a secondary factor,” a note from Capital Economics said, adding data yesterday also showed a hefty $3bn net portfolio outflow in November.

At 1000 GMT, the lira stood at 3.0297 against the U.S. currency, having earlier dipped to 3.0488, its lowest since September when it hit a record low of 3.0750.

The main BIST 100 share index turned negative after the attack, down 0.41 percent at 70,793.75 points and in line with emerging markets index.

The benchmark 10-year government bond yield stood at 11.39 percent.

Forex heatmap

Reuters

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell