News World Turkish lira near record low as output plunges, Asia FX firms

Turkish lira near record low as output plunges, Asia FX firms

The lira hovered near record lows on Monday as data showed the Turkish economy shrank at its fastest pace in more than a decade due to the COVID-19 pandemic, while Asian currencies firmed following upbeat services sector figures from China.

The lira eased 0.2% to 7.3511 against the dollar, trading just above its historic low of 7.4161, as gross domestic product fell 9.9% in the second quarter, although that was better than an 11.8% decline forecast by economists.

The currency has lost about 19% against the greenback this year – two years after a full-blown currency crisis – despite constant central bank intervention, and analysts said the decline would have been worse if historic stimulus by the U.S. ṅFederal Reserve had not pressured the dollar.

A wider index of emerging market currencies firmed 0.1% to hit its highest in nearly six months, as data showed China’s services sector expanded at a solid rate, recovering from the coronavirus shock.

The Chinese yuan looked set for its best month since January 2019, while the domestic blue-chip index climbed to an over five-year high.

“Despite the silver lining of bottoming, the conspicuous absence of a resilient rebound in the works means that policymakers will remain on their toes,” said Vishnu Varathan, an economist at Mizuho.

The Indian rupee eased 0.7%, snapping a two-day winning streak ahead of figures likely to show the world’s fifth-largest economy suffered its largest quarterly slump on record.

In South Africa, the rand softened against the dollar as investors awaited details of the ruling African National Congress’s (ANC) weekend meeting, which began with opposing factions lashing out over corruption and leading to speculation over possible cabinet changes.

The Russian rouble bounced for a third straight session after a sell-off in the past few weeks that was driven by political risks related to the crisis in Belarus. The oil-linked currency is now on course to end the month with gains of about 1%, recovering from a 2% fall earlier in August.

Among stocks, natural gas giant Gazprom posted an over 50% plunge in second-quarter net income, but said energy markets were recovering from the impact of the pandemic. Its shares were little changed in morning trading. (Reuters)

 

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