June 18 Reuters The Turkish lira firmed up to 1 on Friday but was set for its worst weekly performance in two months after a hawkish Fed and political risks left emerging markets bruised.
An index of emerging currencies was set for its worst week in nine months. Emerging equities snapped a fourweek winning streak, weighed down by losses in China which is seeing renewed tensions with the West.
Analysts at BCA Research expect EM currencies slide to relapse in the coming months.
But EM fundamentals are now much better than they were heading into the Taper Tantrum in the spring of 2013… so a selloff in EM currencies and fixedincome markets will not last long and will offer a very good buying opportunity later this year.
The lira has so far fallen 3.3 this week and is just a little over a percent away from recent record lows. It clawed back some losses after Thursdays steep decline when Turkeys central bank struck a relatively hawkish tone though it appears to have merely postponed policy easing beyond the JulyAugust timeline set by President Tayyip Erdogan.
Yeartodate the lira is down over 14, hit by Erdogans firing of a respected central bank governor which led to fears of a dovish tilt to monetary policy.
Erdogan is likely to get increasingly impatient and vent his frustrations in the media if rate cuts were not delivered, said Commerzbank analysts.
Whether he will make another drastic change at the central bank by decree or not remains to be seen, but his open…