Market Braces For Turkish Lira Collapse To 24 Per Dollar

Market Braces For Turkish Lira Collapse To 24 Per Dollar

By Ven Ram, Bloomberg markets live reporter and strategist

Turkey’s currency markets are on tenterhooks as the possibility of a runoff presidential vote opens up two weeks of uncertainty.

One-month volatility on the lira has surged to 48%, meaning the markets are braced for a possibility that the lira may decline to as much as 24.12 per dollar from 19.65 now. Preliminary results on Monday showed President Recep Tayyip Erdogan with a lead of more than 2 million votes but still without enough to avoid a second round on May 28 against rival Kemal Kilicdaroglu.

The central bank’s back-door interventions to prop up the lira since December 2021 reached nearly $177 billion in April ahead of the elections, with the tally amounting to some $30 billion in April alone, according to Bloomberg Economics. Meanwhile, combined foreign-investor holdings of Turkish stocks and bonds amounted to less than $24 billion on the Friday before the vote, a far cry from levels of above $150 billion a decade ago.

Over in Thailand, it’s a different story, with the baht advancing on news that opposition parties are on course to wrest power from the nation’s military-backed government. While there is still much short-term uncertainty, the baht — which tumbled below 38 per dollar last year — looks on course to consolidate its gains in 2023 given the optimism surrounding the domestic economy.

Tyler Durden
Tue, 05/16/2023 – 02:45

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