The Turkish lira is at a new low due to monetary and geopolitical concerns … the worst performing currencies in emerging markets

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The Turkish currency fell to an all-time low of 8.05 against the US dollar yesterday, as a result of investor concern about the central bank’s decision to keep the main interest rate unchanged last week and geopolitical concerns.
According to “Reuters”, the tension in relations with the United States, the dispute with France, the dispute between Turkey and Greece over maritime rights and the battles in Nagorno Karabaj caused investor concern.
The lira fell more than 1 percent from last Friday’s closing level of 7.9650 pounds and was the worst performing in emerging markets, the currency has lost 26 percent this year and more than half of its value since the end of 2017.
“The escalation of geopolitical tensions with the United States and the European Union is a new source of pressure to weaken the pound. Other factors are doubts about the reliability of monetary policy and the appropriateness of the return of the pound,” said a trader in the exchange market at a local bank.
The central bank had kept the benchmark interest rate at 10.25 percent and raised the delayed liquidity window to 14.75 percent, saying that a broad tightening of financial conditions had already been achieved after steps to contain inflation risks.
The central bank was also expected to raise the interest rate by 175 basis points to 12 percent last Thursday in light of the weak performance of the pound, which sparked concerns about high inflation and the sharp decline in foreign exchange reserves.
The dollar rose yesterday, as dealers proceeded to be cautious due to the increasing cases of Coronavirus in Europe and the United States, as well as the lack of progress in the US economic stimulus package.
Nancy Pelosi, the Speaker of the US House of Representatives, said yesterday that she expected a response from the White House to the latest stimulus plans, but there were few indications of an imminent agreement.
The United States recorded its largest number of new Covid-19 infections for two consecutive days, and so did France. Spain declared a state of emergency again and ordered Italy to close restaurants by 6 pm.
Stephen Ince, chief global market strategist at Axi Brokerage, said hopes for a vaccine prevented markets from crashing yesterday.
He added, “Fortunately, there are several vaccines under development, had it not been for this, the market would have collapsed sharply in light of the burning of hot spots of Covid-19 all over the world.”
The dollar index rose 0.2 percent to 92.95. The euro fell 0.3 percent to $ 1.1831. The dollar rose 0.1 percent to 104.87 Japanese yen.
The biggest losses in the major currencies were due to the Norwegian krone and Australian dollar, which enjoyed big gains last week when traders were more accepting of the risk.
The Australian dollar fell 0.3 percent to $ 0.7118. The Norwegian currency fell 0.9 per cent to 9.3015 kroner for the dollar and lost 0.7 per cent against the euro to record 11.0050, after falling earlier to the lowest price in three weeks at 11.0190.
The pound fell in early trade, falling 0.3 percent to $ 1.2995, but stabilizing against the euro at 91 pence.
The Chinese yuan fell 0.4 percent to 6.6907 yuan per dollar in the foreign market, as the Chinese government worked hard on its new five-year plan.
In addition, gold fell from the psychologically important level of $ 1900 yesterday to record the lowest price in more than a week, under pressure from the strength of the dollar and the lack of progress in talks on a new US stimulus package.
Gold fell in the spot market 0.2 percent to $ 1897.35 an ounce by 07:11 GMT, after hitting $ 1890.19, its lowest level since October 15.
In US futures, the metal was down 0.4 percent to $ 1,898.20.
“It seems that there is no momentum to find additional buyers (for gold) … this is largely due to the fact that trading is taking place in light of the imminent US elections and stimulus speculation,” said Kyle Roda, an analyst at IG Markets.
Gold, widely seen as a hedge against inflation and currency devaluation, has risen 25 percent this year as central banks and governments announce unprecedented stimulus programs to ease the economic fallout of the pandemic.
In other precious metals, palladium lost 0.8 percent to record 2,372.80 dollars an ounce, while platinum fell 2 percent to 883.14 dollars. Silver fell 1.8 percent to $ 24.14 an ounce.

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