Published Apr 23, 2019 10:04AM ET
Updated Apr 23, 2019 01:40PM ET
The Lira’s Resilience to Rising Oil Prices Is Baffling Analysts
(Bloomberg) -- Analysts are having a hard time explaining the lira’s resilience to rising oil prices.
The worst-performing currency in emerging markets this month fell just 0.2 percent as of 3:02 p.m. in London even as Brent crude nears $75 a barrel. The U.S. decision to end oil waivers granted to Iran’s customers is a setback for Turkey, a neighbor that’s more reliant on Iranian oil than any other country.
“There have been numerous questions marks on the coordinated action of the authorities to support the lira and one can not rule out any form of intervention,” Guillaume Tresca, a strategist at Credit Agricole (PA:CAGR) SA in Montrouge, France. “The problem is the Turkish lira does not seem to be a liquid market and it is not reacting normally anymore.”
With Turkish markets closed for a national holiday, low liquidity might be one reason for the lira’s muted response. Investors have also become hesitant to short the currency after some caught out by a surge in local swap rates last month. Instead, they cut their exposure to local bonds for three straight week through April 12, according to central bank data.
Here’s what money managers and strategists are saying about the lira’s inertia:
Credit Agricole’s Tresca:
Cristian Maggio, the London-based head of emerging-market strategy at TD Securities
Piotr Matys, a London-based analyst at Rabobank
Written By: Bloomberg
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.