Turkey ETF Climbs as Central Bank Moves to Strengthen Lira

The U.S. dollar has been strengthening against the lira currency in recent weeks, with the dollar trading at TRY3.8406 Monday, compared to TRY3.41 back in September. The central bank’s moves may have been pushed through after the Turkish lira depreciated to a historic low of TRY3.90 against the USD on November 4 amid growing expectations that the Federal Reserve will hike interest rates next month and further tighten its monetary policy in 2018.

The moves by the central bank were “light measures to stop the bleeding” in the currency, Ozgur Altug, chief economist at BGC Partners, said in a note to clients, Reuters reports.

Many investors have an unfavorable view countries, especially emerging countries, with weakening domestic currencies. Something like TUR, which does not hedge its currency risk, also suffers when the domestic currency depreciates since U.S. dollar-denominated returns are lowered once converted back from weak lira-denominated Turkish company stocks.

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