The lira swung between gains and losses as traders assessed whether a doubling of interest rates would be enough to stem capital outflows in the face of further reductions in U.S. monetary stimulus. Stocks fell.
The lira extended its drop to a record low against the dollar and stocks slid after the Turkish central bank’s first unscheduled intevention in more than two years failed to stem the currency’s decline yesterday.
The selloff that sent Turkish local- currency debt plunging five times more than emerging-market peers last year is showing few signs of easing, amid a standoff between Prime Minister Recep Tayyip Erdogan and the judiciary.
Taiwan’s dollar and the Indonesian rupiah are forecast to lead a recovery in Asian currencies next year as attention shifts to the region’s growth potential and away from the reduction in U.S. monetary stimulus.
Russia’s currency is gaining the most in seven months and the cost to protect government debt payments is tumbling as the rising price of oil lifts confidence in the economy of the world’s biggest energy exporter.
India’s central bank said foreign funds that have sold offshore derivatives of local stocks and bonds must get their customers’ approval to hedge currency risk on the underlying onshore investments. The rupee rebounded.
Indian policy makers are urging citizens to resist buying gold and boosting scrutiny of speculative currency trades after import curbs and dollar sales failed to stem the world’s biggest currency loss.
China will probably widen the yuan’s trading band within the next three days after central bank Deputy Governor Yi Gang signaled policy makers will loosen control over the currency, according to UBS AG.