The Turkish lira and bonds slipped Friday as increasing conflict in neighbouring Syria unsettled investors, with the market also hit by a global flight to safe-haven assets in response to coronavirus worries.
Syria-related jitters increased after Turkish forces and Syrian rebels fought government troops Thursday in northwest Syria and Russian warplanes struck back in an escalation of the fighting there.
The lira touched a level of 6.11 against the U.S. currency, compared to a close of 6.1005 Thursday. It has lost 2.6% of its value this year, on top of a 36% depreciation in the last two years after a currency crisis in 2018.
The lira was also unsettled by fears over the creeping spread of the coronavirus, which sent funds towards U.S. assets and lifted the dollar to three-year highs.
"The strong trend in the dollar is the most important factor pressuring the lira. Today, the global risk appetite and the developments in Syria will be watched in particular," said a treasury desk trader at one bank.
"The important (lira-dollar) levels of 6.1250 and then 6.15 will be monitored," the trader said.
The lira - which remains somewhat fragile after the 2018 crisis briefly halved its value - has lost ground in nine of the last 12 trading days
In the last few weeks Turkey has funneled troops and equipment to Idlib and threatened to halt advances by Russia-backed Syrian government forces.
At the same time, threatened U.S. sanctions still loom over Ankara's acquisition last year of Russian S-400 missile defences.
The yield on the benchmark 10-year bond rose to 12.31% from 12.03% Thursday. It had recently fallen below 10% thanks to an aggressive rally since May, when the yield was 21%.
The main BIST 100 share index was flat after a 3% decline a day earlier.
Investors and traders say Turkish state banks have been renewing attempts to intervene to buffer the lira after they sold tens of billions of dollars over the past year.
Turkey's lira skidded 11% last year, with the biggest slide between March and May, as interventions began.
In a "flash crash" in Asian trade on Aug. 26 last year, the lira briefly hit a level of 6.47 when liquidity was very low.
Reuters
Comments About This Article
Please fill the fields below.