The Turkish lira has lost 18% of its value since the beginning of the year


The highly-linked currencies of global trade rose yesterday, supported by news of the agreement of US and Chinese negotiators to strengthen cooperation on a trade agreement, at a time when governments are reopening their economies at a slow pace, while the US dollar is struggling to find a direction.

Senior trade representatives from the United States and China discussed the “stage 1” agreement between the two countries, while China said “it has agreed to improve the atmosphere for implementation of the agreement,” and the United States said “the two sides believe that obligations will be fulfilled.”
The phone conversation comes in light of escalating tensions between the two countries, which have been exacerbated by US criticism of China’s response to the outbreak of the new Corona virus.
The Australian dollar, which is closely related to sentiment towards China and the global economy, rose 0.3 percent to 0.6516 USD, after hitting earlier a week’s high. The currencies of a number of emerging markets also rose.
The US dollar rose yesterday after data showed that the world’s largest economy lost fewer jobs than expected last month due to the Corona virus pandemic.
The American currency is on its way to record its biggest weekly gain against the euro in more than a month, but that is more linked to the European single currency regarding asset purchases for the European Central Bank. The dollar is also on its way to its best weekly performance against the Swiss franc.
Data showed that US job losses in April reached 20.5 million, compared to expectations at 22 million, and the unemployment rate was 14.7 percent, which is lower than market expectations at 16 percent.
In trading up to mid-morning, the dollar rose 0.3 percent against the yen to 106.57 yen, while the euro stabilized against the dollar at 1.0827 dollars, and as a result, the dollar index rose 0.1 percent to 99.824.
Today the risk appetite increases significantly, as US stocks and Treasury yields rose.
In contrast, the euro fell 0.1 per cent to $ 1.0823, but held together near the almost two-week low of 1.07665 yesterday, although it fell more than 1 per cent per week.
Against the yen, the dollar rose to 106.32 yen, above a seven-week low, which it touched on Wednesday.
As for the Turkish lira, it stabilized after reaching a record low in the previous session, as investors are cautious about depleting currency reserves and the need for foreign financing, with the economy affected by the Corona pandemic.
The currency stabilized at 7.1050 by 0600 GMT, retreating slightly from the closing level of 7.1000 yesterday, when it reached an all-time low of 7.2690.
The lira has lost about 18 percent of its value since the beginning of this year under pressure from the emerging Corona virus, which has killed 3,641 people in Turkey.
Market fears were fueled by statements by a Federal Reserve policy-maker, “the US central bank,” on Wednesday evening, which dealers interpreted as excluding a swap line from the US central bank to protect depleted reserves.
Yesterday, the banking watchdog in Turkey prevented BNP Paribas, Citibank and UBS from conducting transactions on the lira, saying that “they were unable to meet the liabilities in a timely manner.”

Al-Iqtisadiah from Riyadh


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