Turkish lira leads emerging market gains
Turkey’s lira led gains for emerging-market currencies on Monday as oil prices continued a fall and U.S. Treasury yields declined.
The lira rose 1.1 percent to 4.65 per dollar at 10:55 a.m. in Istanbul. The Polish zloty added 0.7 percent to 3.67 and the South African rand climbed 0.5 percent to 12.44 per dollar.
The lira has outperformed after Turkey’s central bank boosted interest rates by 300 basis points to 16.5 percent at an emergency meeting last week. The currency had slid to a record low of 4.92 per dollar just before the meeting as investors worried that the authoritarianism of President Recep Tayyip Erdoğan, who says interest rates should be lowered, was unduly influencing monetary policy.
The price of crude fell 1.6 percent to $66.8 per barrel. The benchmark U.S. 10-year bond was trading at 2.93 percent, below a key psychological level of 3 percent.
Expectation of rate increases by the U.S. Federal Reserve have led to an exodus from emerging-market assets. Bonds of developing companies have slid as a result -- declining for six-straight weeks -- particularly those of countries with high inflation rates such as Turkey, Argentina and Ukraine. Turkey has also suffered due to its reliance on imported oil.
Turkey’s 10-year lira bonds closed Friday at yields of 14.2 percent, off recent highs above 14.5 percent.