Turkey’s widening current-account deficit and record low yields will weaken the lira over the next three months, slamming the brakes on this year’s bond rally, according to Barclays Plc, the top forecaster for the currency.
Emerging-market stocks rose, led by financial and telecommunications companies, as the European Central Bank cut its deposit rate below zero to counter the prospect of deflation. Russia’s ruble rallied.
Hungary’s forint, the worst performing emerging-market currency in the past year, will probably rally in 2011 as the government seeks to use private pension fund assets to plug its budget shortfall, according to KBC Groep NV, Barclays Capital and UniCredit SpA.
The world’s best bond and currency rally risks reversing as Hungarian Prime Minister Viktor Orban stalls on conditions for a bailout, according to BlackRock Inc., Citigroup Inc. and Royal Bank of Scotland Group Plc.