Turkish lira and equities enjoy modest recovery
LONDON: Turkey’s lira recovered somewhat yesterday, while equities also rebounded from the previous day’s turmoil thanks to upwardly-revised eurozone growth data.
Investors shifted back into buying mode but kept a nervous eye on Ankara after Monday’s bloodletting, which saw the lira hit record lows and equity markets go into freefall on concerns Turkey’s financial crisis could spread globally. In European deals, the Turkish unit advanced to 6.57 to the dollar and 7.50 to the euro, which was well off the all-time record lows seen the previous day, after Turkey’s central bank vowed to boost liquidity.
Fears about Turkey-driven contagion in other economies, particularly emerging markets, sparked a global sell-off Monday-but there were healthy recoveries in Asian and European stocks yesterday.
‘Calm for time being’
The Frankfurt stock market gained 0.3 percent and Paris won 0.2 percent on upgraded second-quarter growth data, while London rose 0.1 percent in late morning deals on news of a falling UK unemployment rate. “Turkey’s central bank managed to calm down the currency markets for the time being by committing to provide liquidity for the embattled Turkish lira and the currency’s two day free fall has finally slowed down,” said Fiona Cincotta, senior market analyst at traders City Index.
“The lira even managed to claw back some lost ground... allowing stock and commodity markets to recover.” The Turkish currency, which had touched historic nadirs of 7.24 to the dollar and 8.12 to the euro on Monday, has now plunged by about a fifth against the greenback since last Friday.
Turkey’s crisis has been sparked by a series of issues, including a faltering economy-the central bank has defied market calls for rate hikes-and tensions with the United States, which has hit Ankara with sanctions over its detention of an American pastor.
There remain concerns about how the crisis will pan out, with Turkish President Recep Tayyip Erdogan in combative mood, accusing Washington of plotting against his country.