TL performing strongest since July 15 coup attempt

DAILY SABAH WITH WIRES
ISTANBUL
Published 16.08.2016 23:30

The Turkish lira rose to 2.9312 against the dollar in the morning hours yesterday and the exchange rate went below 2.92 at 2.9195 during the closing session. The lira is now at its strongest level since the July 15 failed coup attempt.

Amid a jump in oil prices and expectations that easy monetary policy will be extended around the globe, the Turkish lira yesterday was trading marginally higher against the U.S. dollar as the greenback was weak against other emerging currencies after hopes of an interest rate hike by the U.S. Federal Reserve (Fed) this year waned.

On a global scale, the dollar slumped as dealers awaited the release of minutes from the Federal Reserve's latest meeting, while an overnight jump in oil prices lifted emerging Asian currencies.

The Fed is today due to release minutes of its July 26-27 meeting, when it left key interest rates unchanged. But the Fed acknowledged an improved performance in the world's top economy, suggesting a rate hike may still be on the horizon this year.

A rise in borrowing costs would likely stoke demand for dollar-denominated assets, boosting the greenback.

"The market really has not moved to price in any more chance of Fed tightening," Daniel Katzive, head of foreign-exchange strategy for North America at BNP Paribas, told Bloomberg News. "That's sapped the dollar of any momentum." In Tokyo, the dollar slipped to 100.44 yen from 101.25 yen Monday in New York and its lowest level in about a month, while the euro was at $1.1191 against $1.1183.

The common currency weakened to 112.41 yen from 113.23 yen in U.S. trade.

The pound traded at $1.2902 against $1.2883 in the U.S., still near its weakest levels in more than 30 years touched in the aftermath of Britain's June vote to leave the European Union.

The dollar also dropped against higher-yielding emerging market currencies, which benefited from stronger oil prices and an uptick in investor sentiment.

The oil-linked Malaysian ringgit, the South Korean won, Singapore and Taiwan dollars, Philippine peso and Indonesian rupiah all rose against the U.S. unit. "A recovery in risk appetite is sending emerging currencies stronger," said Wu Mingze, a Singapore-based foreign-exchange trader at INTL FCStone Inc. "Commodities are rallying, lifting stock prices and commodity currencies."

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