Japan’s yen extended its pullback early on Wednesday, while higher-risk currencies such as the Australian dollar rallied after Turkey stunned markets with a massive interest rate hike in an effort to stem capital flight from its economy.
Turkey’s central bank, hot on the heels of India, raised all of its key interest rates – more than doubling some – in a move that could help calm jitters over emerging markets in general. The Turkish lira jumped to 2.1795 per U.S. dollar from 2.2530 before the moves.
The Australian dollar, often used as a liquid proxy for risk trades, rallied about 40 pips to $0.8813. It last traded at $0.8797. Against the yen, the Aussie came within a hair’s breadth of 91.00 yen from 90.30.