The Turkish lira has become the second-best performing currency against the U.S. dollar since the beginning of April, after being deemed the most highly appreciated currency on Monday, among currencies leading the emerging market. Following the "yes" result in Turkey's April 16 referendum, the improving expectations of foreign investors and businesspeople coupled with the increasing risk appetite in global markets have ushered in an increase in demand for Turkish lira assets.
The dollar-Turkish lira parity, which was at around 3.7376 prior to the referendum, declined with the elimination of uncertainty and positive investment predictions.
Another factor now bolstering the global risk appetite is the uncertainty surrounding the French presidential election and the fact that Emmanuel Macron, leader of the political movement En Marche! (Onwards!), is considered a "market friend" among presidential candidates, leading the election followed by far-right Marine Le Pen of the National Front.
The South African rand, on the other hand, has become the most appreciated currency against the dollar since the beginning of April, increasing by 2.60 percent compared to the Turkish lira, which performed second best with an increase of 1.35 percent.
During the same period, the Hungarian forex appreciated by 1.01 percent against the dollar, followed by the India rupee with 0.61 percent and the Indonesian rupee with 0.31 percent, while the Brazilian real depreciated by 0.20 percent against the dollar followed by the Mexican peso with 0.33 percent and the South Korean won with 0.77 percent.
Yesterday, as of 1 p.m., the dollar-Turkish lira parity was at 3.5870 while the Turkish lira was being traded at 3.9060 against the euro, marking an increase of 0.61 percent. It traded at 4.5960 against the pound with an increase of 0.56 percent.
However, during the day, the Parliamentary Assembly of the Council of Europe (PACE) decided to reopen a political monitoring process against Turkey following the April 16 referendum on constitutional reform. The assembly gathered yesterday in France's Strasbourg in a session to discuss a report titled, "The functioning of democratic institutions in Turkey," in which 113 voted went in favor of the monitoring decision and 45 voted against it. In the wake of that decision, the parity hit 3.5934.
Analysts pointed out that investors tend to invest in emerging countries with the increase in global risk appetite and the decrease in geopolitical risks, suggesting that the Turkish lira is more positively diverged against other currencies.
Recalling that the Turkish lira negatively diverged from other currencies due to uncertainty prior to the referendum and that it tried to close afterwards, analysts said the appreciation could continue.
The dollar index fell back to 98.79 on Monday in global markets, hitting the lowest level in nearly five-and-a-half months, while the euro-dollar parity saw a five-and-a-half-month peak at 1.0935.
The Turkish lira, which displayed the best performance among leading emerging market currencies on Monday, became the most appreciated currency against the dollar with an increase of 1.86 percent.
On Monday, the Hungarian forex gained 1.69 percent, followed by the Russian ruble with 1.50 percent, the Brazilian real with 0.76 percent and the South African rand with 0.40 percent.
Since the beginning of the year, the Turkish lira lost 1.7 percent against the dollar, while other emerging market currencies appreciated between 2 and 10 percent. Analysts said in technical terms, the 3.50 level in the dollar-Turkish lira parity is psychological support and, in the case of a possible rise, levels of 3.6250 and 3.6550 will be seen as resistance.