Turkish Lira Takes Breather From Worst Losing Streak in 20 Years
(Bloomberg) -- One of the highest-level visits between Turkey and the United Arab Emirates in years is giving the lira a reprieve from a freefall.
President Recep Tayyip Erdogan is meeting Abu Dhabi Crown Prince Sheikh Mohammed Bin Zayed Al Nahyan in Ankara, and the two nations are expected to sign cooperation deals for their wealth funds and stock exchanges.
That has helped the currency strengthen as much as 11% to 11.5871 per dollar as of 4:15 p.m. in Istanbul. The lira’s rebound comes after an 11-day slide that put its year-to-date loss at 38%, the worst performance among emerging markets tracked by Bloomberg.
“History shows the lira tends to rebound from sharp sell-offs once the situation stops deteriorating -- even if conditions aren’t improving,” said Nick Stadtmiller, director of emerging markets at Medley Global Advisors in New York. “But the medium-term trend for the lira will remain to the downside as long as monetary policy is too loose and officials are unwilling to undertake structural adjustments.
The lira has been battered in recent weeks as Erdogan’s push for lower interest rates, intended to turbo-charge growth and create jobs, instead led to increased concern over price shocks and generated the worst lira liquidity in two decades.
Turkish Stocks Decouple From Plunging Lira and Rally: Chart
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