TEHRAN, Young Journalists Club (YJC) -World share markets rebounded on Tuesday as Turkey’s lira pulled out of a recent nosedive and reassuring data from Germany helped offset the latest softness in China’s economy.
After three weeks of heavy pounding, the lira TRYTOM=D3 recovered some ground, trading at about 6.37 to the dollar, up almost 8 percent from the previous day's close.
The Turkish currency was supported by news of a planned conference call in which the finance minister will seek to reassure investors concerned by President Tayyip Erdogan’s influence over the economy and his resistance to interest rate hikes to tackle double-digit inflation.
The dollar advanced to a 13-month peak against a basket of major currencies as traders increased their safe-haven holdings of the U.S. currency on worries about the lira-related fallout.
The Turkish currency lost almost 10 percent on Monday and nerves were briefly tested again as Erdogan urged Turks to boycott U.S. electronic products in response to recent criticism from Washington.
“I don’t believe it’s all over,” said Minh Trang, senior currency trader at Silicon Valley Bank in Santa Clara, California. “We are just getting a bit of reprieve from the recent down move.”
The Turks have exhausted the possibility of interest rate hikes and are backed into a corner by their inadequate level of currency reserves, Paul McNamara, emerging markets investment director at GAM Investments in London, said in a note.