The Turkish lira weakened more than 1% against the dollar on Monday, after brief...
ISTANBUL/ANKARA - The Turkish lira weakened more than 1% against the dollar on Monday, after briefly tumbling to 6.47 overnight in what market watchers described as a “flash crash” as Japanese investors cut risk assets over Sino-U.S. trade war worries.
The China-U.S. trade war, which intensified in recent days, “means that EM FX will continue to weaken for the foreseeable future. In the absence of a thawing in trade frictions it remains a market to be structurally short EM and buy dollars on any dip,” currency analysts at Societe Generale said in a note.
The brief plunge in thin overnight yen/lira trading was reminiscent of another “flash crash” on Jan. 3, when Turkey’s currency weakened to a similar level due to a global market sell-off and flight from risk triggered by concerns about slowing economic growth. After having gained in recent months, the lira has been newly pressured by concerns over possibly rapid loan growth after a central bank decision to lower required reserves limits and boost returns for lenders with more than 10% loan growth.
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