* Turkey’s lira hits two-month low, equities fall
* Turkey headed for runoff vote on May 28
* Thai baht rallies after opposition secures win
* South Africa’s rand recovers from record lows
May 15 (Reuters) – Turkey’s lira hit a two-month low on
Monday and the country’s credit default swaps jumped as a
tightly-contested presidential election headed towards a runoff
vote, while broader emerging market equities snapped a four-day
losing streak.
Turkey’s elections appeared set for a runoff vote, to be
held on May 28, after President Tayyip Erdogan led over his
opposition rival Kemal Kilicdaroglu, but fell short of an
outright majority in Sunday’s election – an event seen as the
biggest political challenge to Erdogan’s 20-year rule.
The lira weakened to 19.70 versus the dollar in
the opening hours, Turkey-issued dollar bonds fell by more than
5 cents and the cost of insuring exposure to the country’s debt
spiked on Monday. Borsa Istanbul issued a market-wide circuit
breaker after the benchmark index dropped more than 6%
in pre-market trading.
The election results came as a dissapointment to investors
hoping for a shift to a more orthodox monetary policy amid
recent challenges plaguing the Turkish economy including runaway
inflation, a searing drop in the lira and devastating
earthquakes earlier this year.
“Had the opposition candidate won outright, you would have
seen an appreciation in the lira and that would have been based
on the assumption that the opposition candidate would return to
orthodox policy, restore investor confidence and attract public
and private sector capital flows,” said Elliot Hentov, head of
macro policy research, State Street Global Advisors.
The Thai baht climbed nearly 1% after the country’s
opposition secured a stunning election win on Sunday, trouncing
parties allied with the military.
Broader emerging market stocks rose 0.4%, while
currencies were flat.
The South African rand gained 1.5%, recovering from
all-time lows hit last week after the worst power cuts on record
and on allegations of arms shipment to Russia.
Sentiment towards the currency has improved after South
African officials rejected the allegations, with President Cyril
Ramaphosa stating on Monday the country’s non-aligned position
did not favour Russia over other states.
In other news, Pakistan’s external financing requirements
have not been changed in talks with the International Monetary
Fund (IMF) over bailout funds, the IMF Resident Representative
in Pakistan said, denying local media reports that the Fund was
seeking fresh financing.
For GRAPHIC on emerging market FX performance in 2023, see http://tmsnrt.rs/2egbfVh
For GRAPHIC on MSCI emerging index performance in 2023, see https://tmsnrt.rs/2OusNdX
For TOP NEWS across emerging markets
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see
(Reporting by Amruta Khandekark; Editing by Sherry
Jacob-Phillips)
