EMERGING MARKETS-Turkish lira drops another 1%; FX set for third weekly loss

  • 9/24/2021
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* Turkish lira nears record lows * South African rand gives up strong Thursday gains * China Evergrande jitters dent emerging market stocks * Turkey stocks slip as manufacturing confidence falls Sept 24 (Reuters) - The Turkish lira fell to near record lows on Friday, a day after a surprise rate cut from the central bank, while broader emerging markets currencies headed for their third straight weekly loss on jitters from the China Evergrande crisis. The lira was down nearly 1% at 8.855 to the dollar by 0747 GMT, hitting its weakest level since June 2. The currency, down nearly 16% this year, is among the worst performers in emerging markets, with Turkey’s heavy foreign debt and the independence of its central bank seen as the main concerns for investors. On Thursday, the central bank was widely expected to hold interest rates steady at 19%, but instead delivered stimulus long sought by President Tayyip Erdogan and sent the lira sinking 1%. “The example of the previous rate-cutting cycle (in 2019) tells us that USD-TRY risks (could be) going exponential at some point in coming months,” Commerzbank FX analyst Tatha Ghose wrote in a note. “We hold a symbolic 10.00 forecast for the exchange rate, not in a fundamental fair-value sense, but as a warning to our readers about the magnitude of potential depreciation risk they face from this non-transparent, inconsistent monetary policy.” Turkish stocks dropped 0.6% as data showed business confidence among manufacturers fell in September from the previous month. The emerging markets currencies index fell 0.2%, tracking weakness in Asian markets on uncertainty around the fate of debt-ridden China Evergrande, which missed an interest payment deadline on Thursday and has entered a 30-day grace period. Hong Kong shares were down more than 1% and tracking weekly declines of nearly 3%, with Evergrande shares shedding 11% on the day. The South African rand weakened 1%, although local markets were closed for a holiday. The currency had jumped in the previous session as the central bank held interest rates at a record low. Russia’s rouble also eased against the dollar and was on track for a subdued finish to the week. The MSCI emerging market stock index fell 0.5%, tracking its third straight weekly decline. For GRAPHIC on emerging market FX performance in 2021, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2021, see tmsnrt.rs/2OusNdX For TOP NEWS across emerging markets For CENTRAL EUROPE market report, see For TURKISH market report, see For RUSSIAN market report, see

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