The lira is headed for its longest run of weekly losses this century as Turkey’s new economic team curbs its intervention in the currency market.
(Bloomberg) — The lira is headed for its longest run of weekly losses this century as Turkey’s new economic team curbs its intervention in the currency market.
The Turkish currency depreciated another 1% this week, after last week’s 11% slide. It’s now been falling since early March, in the longest streak of losses since 1999.
The declines have quickened following President Recep Tayyip Erdogan’s re-election on May 28. In the 18 months before the vote, the central bank used up nearly $200 billion of reserves trying to bolster the currency, yet it remained one of the worst performers in emerging markets.
Erdogan has now appointed two former Wall Street bankers — Mehmet Simsek and Hafize Gaye Erkan — to run the country’s finances, signaling a potential shift from heavy state intervention in favor of allowing the market to determine the currency’s fair value.
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For many foreign investors, the lira is finding its equilibrium. Expectations are growing for capital inflows into the country’s bonds and stocks to increase. Overseas investors purchased a total of $287 million of Turkish bonds and stocks last week, the biggest inflow since December, the latest central bank data showed.
–With assistance from Beril Akman.
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