March 3, 2020 / 4:15 PM / a month ago

Battered Turkish lira rebounds 1.6% after Fed relief cut

ISTANBUL, March 3 (Reuters) - The Turkish lira rallied 1.6% on Tuesday, briefly touching its strongest level in nearly three weeks, after the U.S. Federal Reserve delivered an emergency interest-rate cut to cushion the economic blow from the coronavirus spread.

The lira firmed to 6.065 at 1557 GMT against the dollar, which tumbled after the Fed cut rates by 50 basis points.

Turkey’s currency has rebounded this week after logging nine straight down days as investors sought safer assets due to the virus, and also as Turkey’s military involvement deepened in neighbouring Syria.

“This is definitely not good for the dollar. The Fed is reducing the cost of carry,” Mark McCormick, global head of FX strategy at TD Securities, said of the so-called carry trade in which investors seek higher returns in riskier assets such as that of Turkey.

A Turkish FX trader said the lira appreciation was due to the Fed move and expectations of further stimulus from major central banks and economies.

Reporting by Jonathan Spicer and Nevzat Devranoglu; Editing by Alison Williams

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