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.
Nouriel Roubini is no clearer on whether Turkey’s central bank will cut borrowing costs tomorrow than economists or traders after a drop in the lira prompted investors to pare bets for a reduction in interest rates.
The ruble surged the most in almost 22 months against the euro and climbed to a one-year high versus its target basket on the first day of 2011 trading amid speculation local investors are repatriating funds on concern Europe’s debt crisis will worsen.
Turkish bond yields surged and stocks slumped after Prime Minister Recep Tayyip Erdogan failed to calm investor concern as anti-government protesters demonstrated for the seventh day. The lira depreciated.
Foreign-exchange reserves at Turkey’s central bank surpassed $100 billion, the highest on record, helping policy makers limit swings in the currency and serving to underpin the world’s biggest bond rally.