Monday saw US Treasury Secretary nominee Steven Mnuchin state that excessive USD strength could harm the economy in the near-term, with his comments sending the greenback lower versus the G3, particularly the Japanese yen.
Article / 20 July 2016 at 11:30 GMT

Daily Shot: Pressure on Turkish lira increases as crackdown widens Team / Saxo Bank
  • Turkish lira is under pressure as crackdown after failed coup accelerates
  • Government insists that capital controls are "out of the question"
  • US dollar investors have fled Turkish stock market in past week

By Walter Kurtz*

We start with emerging markets where the Turkish lira dropped below last Friday's lows (chart shows the number of lira one dollar buys).

USDTRY chart
Given that the coup had failed, why is the lira still under pressure? It has to do with the rather disturbing headlines coming out of Turkey. Firing thousands of teachers in response to the coup? Is this Turkey's version of the Cultural Revolution? What's next, burning books?

Telegraph headline


Reuters snippet

FT poll results

On Twitter, the message from the Turkish Deputy PM (who used to be the Finance Minister) was clear: stop beating up on the lira. The central bank is not going to ease too much, and there is no need to hoard dollars because "capital controls are out of the question". Perhaps.

Mehmet Simsek Twitter message

Indeed, we had only a 25bp rate cut by the Turkish central bank - less than expected. Stabilising the lira has become the priority now.

Turkey overnight lending rate

The bounce in Turkey's stock market didn't last.

BIST 100 (XU100) chart

US dollar investors in Turkish shares are now down 11.5% over the past week.

iShares MSCI Turkey Invest Mkt chart

The nation's government bonds sold off further, although the yields remain relatively low vs. earlier this year.

Turkey 10Y chart

Similarly, Turkey's sovereign CDS spread saw a relatively minor increase thus far.

Annual probability of default from 5Y CDS spreads

— Edited by D. Deacon 

*Walter Kurtz is an alias

**This is an abridged version of the Daily Shot. To subscribe to the full version, click here. E-mail addresses are never shared with anyone.


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer
- 沪ICP备13028953号-1

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail