Turkish Lira Slides to Two-Month Low
05 5월 2016 - 10:10AM
Dow Jones News
Turkey's lira slumped to a two-month low against the dollar
after officials said the prime minister would step aside,
delivering a fresh reversal to a roaring 2016 emerging-markets
rally.
The dollar was up 3.9% Wednesday afternoon at 2.9589 lira, its
highest level since late February. The move came after officials
said Turkish Prime Minister Ahmet Davutoglu was stepping down from
his post and as head of the nation's ruling party.
Mr. Davutoglu has served as President Recep Tayyip Erdogan's
handpicked successor, but the two have been jostling for power in
recent months.
The lira's decline follows drops in several other
emerging-market currencies, reflecting concerns about global growth
and demand for raw materials, a key export of many developing
countries.
The dollar has gained nearly 5% against the South African rand
since May 2, while also strengthening against the Brazilian real,
Russian ruble and Mexican peso.
The iShares MSCI Turkey exchange-traded fund, which holds shares
of Turkish companies, fell more than 8.1%, its biggest one-day
percentage drop since June 2013. The Vanguard FTSE Emerging Markets
ETF fell 1.4%.
The emerging-market declines underscore the vulnerability of
these assets following a sharp and largely unexpected rebound this
year. Some investors are concerned that the gains have been fueled
by a rally in oil and other commodities that would prove
unsustainable. Many emerging markets, such as Turkey and Brazil,
also face political instability.
Investors have also been reducing their bets on emerging markets
ahead of U.S. jobs data due Friday. A strong report could bolster
the case for the Federal Reserve to raise interest rates in coming
months, a move that would likely boost the dollar against
emerging-market currencies.
"Until we get a clearer direction on commodity prices and the
Fed, it will be very difficult for investors to trade with
conviction," said Nick Verdi, senior emerging market FX analyst at
Standard Chartered.
Leslie Josephs and Dion Nissenbaum contributed to this
article.
(END) Dow Jones Newswires
May 04, 2016 20:55 ET (00:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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