LONDON Jan 12 The Turkish lira rebounded on
Thursday as dollar weakness helped it move off record lows while
emerging stocks rose to two-month highs, led by strong gains in
Russia and some Asian bourses.
The Turkish lira, which has lost around 8 percent
against the dollar since the start of 2017, recovered by 1.2
percent, pulling away from Wednesday's record lows as the dollar
fell 0.7 percent against a basket of currencies.
"There is in general a more optimistic sentiment on emerging
currencies today, which is because of the dollar weakening as a
consequence of Trump's speech yesterday," said Cristian Maggio,
head of emerging markets strategy at TD Securities.
At Wednesday's news conference, U.S. President-elect Donald
Trump gave few details about his fiscal expansion plans,
disappointing those who had bet on major stimulus, sending the
dollar to one-month lows.
Maggio said the lira was still underperforming its emerging
market peers, but could enjoy a "very short-term respite" due to
general market conditions and the central bank's attempts to
tighten some of the short-term monetary conditions. The central
bank did not open a one-week repo auction in an effort to
tighten liquidity, raising hopes of other moves to shore up the
"But none of that is structural and long-term and the lira
will remain skewed to extreme weakness until the central bank
decides to hike ... interest rates," he said.
In recent days the lira has been pounded by concerns about
Turkey's political reforms, its sluggish economy, rising
inflation and militant attacks.
Political tensions remained high on Thursday after deputies
in parliament brawled during a debate on constitutional reforms
aimed at expanding the powers of President Tayyip Erdogan.
Other emerging currencies also made gains, with the South
African rand among the strongest performers, up 1.6
The Mexican peso also firmed 0.9 percent after
hitting a record low on Wednesday after Trump said U.S. car
companies would face a high tax for products made in Mexico.
Trump also reiterated that the United States would start
building a southern border wall after he took office and he
wants Mexico to reimburse the cost through a tax or a payment.
China's yuan firmed 0.6 percent and overnight
offshore borrowing costs eased to 2.69 percent after surging to
more than 60 percent last week due to tight liquidity. The
Korean won also ended up at a one-month high.
The positive momentum extended into equities, with the
benchmark emerging stocks index rising more than 1
percent to its highest since Nov. 9.
A lack of detail on tariffs in Trump's news conference
boosted Asian export-oriented markets such as South Korea and
Taiwan, while Russian stocks were supported by Trump's defence
of better ties with Moscow, plus higher oil prices.
Korean stocks rallied to their highest level since
July 2015 after Samsung Electronics rose 1.3 percent
to another record high. Taiwan stocks gained 0.7 percent
to their highest since June 2015 and Russian dollar-denominated
stocks surged 2.1 percent.
Russian assets have been supported for weeks by the view
that Trump will pursue a friendlier policy than President Barack
Obama, with some investors betting on an easing of Western
sanctions imposed against Moscow during the Ukraine crisis.
Serbia's central bank is expected to keep rates on hold at 4
percent on Thursday as policymakers pursue a lower inflation
target and seek to reassure investors ahead of an election in
The bank has been intervening in the local interbank market
in recent days to bolster the dinar, but it was flat against the
euro ahead of the meeting.
For GRAPHIC on emerging market FX performance 2016, see tmsnrt.rs/2e7eoml
For GRAPHIC on MSCI emerging index performance 2016, see tmsnrt.rs/2dZbdP5
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see )
Emerging Markets Prices from Reuters
Equities Latest Net Chg % Chg % Chg
Emrg Mkt Indx 896.06 +9.33 +1.05 +3.92
Czech Rep 927.43 -0.50 -0.05 +0.63
Poland 2026.72 -3.92 -0.19 +4.05
Hungary 33032.73 +60.53 +0.18 +3.22
Romania 7245.62 +6.92 +0.10 +2.27
Greece 664.41 +1.04 +0.16 +3.23
Russia 1176.34 +20.84 +1.80 +2.08
South Africa 45901.07 +155.45 +0.34 +4.55
Turkey 79744.51 +2077.94 +2.68 +2.06
China 3119.63 -17.13 -0.55 +0.52
India 27241.05 +100.64 +0.37 +2.31
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 27.01 27.03 +0.07 -0.02
Poland 4.37 4.37 -0.16 +0.73
Hungary 307.81 307.50 -0.10 +0.33
Romania 4.49 4.49 +0.07 +1.01
Serbia 123.71 123.73 +0.02 -0.29
Russia 59.37 59.69 +0.53 +3.18
Kazakhstan 332.05 334.06 +0.61 +0.48
Ukraine 27.23 27.17 -0.22 -0.84
South Africa 13.53 13.73 +1.46 +1.47
Kenya 103.85 103.70 -0.14 -1.43
Israel 3.83 3.83 +0.13 +0.67
Turkey 3.83 3.86 +0.78 -8.00
China 6.89 6.94 +0.63 +0.73
India 68.04 68.26 +0.32 -0.14
Brazil 3.20 3.20 -0.00 +1.77
Mexico 21.66 21.86 +0.93 -4.35
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 364 2 .16 7 46.47 1
(Additional reporting by Karin Strohecker; Editing by Gareth