Jun 06 2019

Turkish lira’s rally could be short lived due to Istanbul rerun - Bloomberg

The Turkish lira’s longest streak of gains in five years is likely to end after local traders return from the three-day Ramadan Holiday next week, Bloomberg reported on Thursday.

The Turkish lira strengthened 5 percent over the last month as slowing inflation boosted the relative allure of yields on Turkish debt, Bloomberg said. Turkey’s consumer price inflation slowed to 18.7 percent in May from 19.5 percent the previous month, the Turkish Statistical Institute said on Monday.

The lira, which had gained 1.8 percent this week, was the biggest loser among developing-nation currencies Thursday, Bloomberg said.

“While the carry-friendly market environment seems favourable for the Turkish lira at first glance, traders should remain cautious with their long-lira positions in coming weeks,” Bloomberg quoted Ipek Özkardeşkaya, a senior market analyst at London Capital Group, as saying.

Turkish politics is likely to heat up following the Ramadan holiday, as competition for Istanbul mayoral election on June 23 will accelerate.

Turkey’s Supreme Election Council annulled the Istanbul vote on March 31 last month after accepting the ruling Justice and Development Party (AKP)’s appeal, which referred to severe electoral irregularities.

“The rally could be short-lived if carry traders get out of their long-lira positions before the political scene gets ugly again,” Özdeşkaya said.

https://www.bloomberg.com/news/articles/2019-06-06/holiday-hangover-awaits-turkey-s-lira-as-10-day-rally-sputters