Lira crisis hits Asia’s currencies as marts run for cover

ASIAN CURRENCIES were battered on Monday with the Indian rupee touching a record low as the ongoing crisis in Turkey spilled over to emerging markets and investors flocked to safe-haven assets.

The Turkish lira tumbled to a record low, weakening as much as 13.34%, over concerns about Turkish President Tayyip Erdogan’s rigid control over the economy and a worsening diplomatic rift with the United States.

“If investors continue to be concerned about the events in Turkey, and they likely will be, we could see more pain in store when it comes to risk appetite in the week ahead,” Jameel Ahmad, global head of currency strategy & market research at FXTM wrote in a note. Investors fear the sell-off in the lira could have a ripple effect in global financial markets with the euro, the South African rand and Mexico’s peso already on the receiving end from Turkey’s crisis.

Mr. Erdogan, who has called himself the “enemy of interest rates,” wants cheap credit from banks to fuel growth, but investors fear the economy is overheating and could be set for a hard landing.

Worries about the exposure of European banks to crisishit Turkey prompted investors to bid up safe havens like the US dollar and Japanese yen. The dollar index added 0.07% at 96.423 while the yen strengthened 0.58% by 0535 GMT.

“Today’s market is a little bit more about recalibrating the investment agenda. Investors want to reduce their position. Kind of like, once bitten, twice shy,” said Taye Shim, head of research at Jakarta-based Mirae Asset Sekuritas.

The Philippine peso opened 0.08% weaker at P53.18 to the greenback and traded P53.18-53.375 before closing

0.44% weaker at P53.37.