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.
The top forecaster for the Turkish lira says his prediction for the currency to strengthen by year- end risks being undermined by the country’s external funding needs even as the central bank provides support.
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.
Emerging-market stocks fell the most in a week, led by Chinese equities, on concern regulators may depress valuations by resuming initial share sales. South Africa’s rand slid to an almost four-year low versus the dollar.
The zloty tumbled to the lowest level in 27 months on concern the global recovery is faltering, prompting Polish central bank Governor Marek Belka to warn the currency is getting out of synch with the country’s “healthy fundamentals.”