Strong tremor … Turkish lira loses half of its gains

The MSCI Emerging Market Currency Index fell 0.7% on Monday, heading for the biggest daily drop since the pandemic rocked markets in March 2020, after higher yields on U.S. Treasuries pushed the dollar to rise and hit riskier assets.

Refinitiv data showed the index – which is heavily biased towards Asian currencies – fell to its lowest level in three months at just under 1,700 points.

The Turkish lira, South African rand and Mexican peso have lost more than 1% against the dollar, while the Chinese yuan has fallen 0.5% in its domestic market, turning its performance into negative since the start of the year. the year.

The Turkish lira fell 0.7%, posting a decline in 10 of the last eleven sessions, with high inflation, global bond yields and oil prices in a test of the central bank’s commitment to tighten policy monetary.

After raising interest rates to 17% in December, Central Bank Governor Naji Iqbal said on Friday, “We will take decisive action” to stabilize the double-digit inflation rate. He added that “systemic change” occurred in November when he took over as president of the bank.

The pound has risen since November, but it has given up half of its gains over the past two weeks, and at 0907 GMT, it was 7.575 against the dollar, near this year’s low.

For Turkey, which depends on imports and produces none of its energy needs, the depreciation of the lira increases the cost of imports. And US crude is at its highest level in more than two years today.

Analysts expect Turkey’s central bank to hike interest rates next week to stabilize the currency and fight inflation, which topped 15% last month.