The Turkish lira held steady today, rebounding from the intraday drop, as nation’s bonds were offering big return, attracting carry traders and making the currency more appealing.
Turkish debt was offering one of the highest yields among emerging markets, spurring traders to borrow in countries with low interest rates (like the United States) and invest into Turkey’s assets. Prospects for low borrowing costs in the USA in the near futures suggest that carry trade will continue to support the attractiveness of the lira. At the same time, domestic fundamentals are not particularly supportive and the widening current-account deficit may hurt the currency.
USD/TRY fell a little from 1.9802 to 1.9798 as of 11:20 GMT today after rising to 1.9871 intraday.
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