EMERGING MARKETS-Turkish lira drops to record low; boost from upbeat China data proves temporary

  • Reuters
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EMERGING MARKETS-Turkish lira drops to record low; boost from upbeat China data proves temporary
Credit: © Reuters.

* Lira surpasses 2018 crisis trough, hitting 7.249/dollar

* China data export data surprises to the upside

* China data not an upward trend -analyst

* One non-working month to cut 2% from Russia GDP -cenbank

By Susan Mathew

May 7 (Reuters) - A sixth day in the red pushed Turkey's lira to all-time lows on Thursday amid the economic fall-out from the coronavirus pandemic, while emerging market stocks fell as a boost from upbeat Chinese export data proved brief.

The lira TRY= touched 7.249 to the dollar, surpassing its 2018 currency crisis lows, despite Finance Minister Berat Albayrak's attempt on Wednesday to assuage investor concerns about depleting foreign exchange reserves. currency has lost around 18% against the dollar so far this year with the COVID-19 disease claiming 3,584 lives in Turkey, although the virus spread has slowed in the last two weeks. A forex trader attributed Wednesday's decline to a U.S. Federal Reserve policymaker's comment that was interpreted as ruling out prospects of the Fed extending a swap line to Ankara. volatility derived from options on the dollar-lira currency pair TRY1MO=FN reached its highest in about two weeks, pointing to a relatively wide range of expected moves over the next one month.

"The source of shock itself is, indeed, exogenous. There has been some policy mismanagement of course, for example, the throwing away of valuable reserves in the form of interventions. But, we find these secondary," said Tatha Ghose, an analyst with Commerzbank (DE: CBKG ).

"The lira's decline is raising the burden of FX liabilities. To top it all off, the total return on long lira positions, including the carry, has turned negative which means that momentum is now against the currency. The perfect storm has returned."

Most other currencies in the emerging market space firmed against a steady dollar, leaving an index of developing world currencies .MIEM00000CUS flat. Russia's rouble RUB= gained almost 1% despite a decline in oil prices.

Russian services activity dived to a record low in April as emergency restrictions closed businesses and stalled demand, a survey showed on Thursday. The central bank warned that one non-working month in Russia may subtract up to 2% from a full-year gross domestic product. export data from China surprised much to the upside, amid a raft of dismal economic data from around the globe this week, helping Asian shares pare some losses before trading back. MSCI's index of Asian shares excluding Japan .MIAPJ0000PUS was down 0.3%. .SS

"(The data) should not be perceived as an upward trend," wrote Iris Pang, Greater China chief economist at ING. "The threat of a trade war could change this. The yuan will be volatile."

Pang points out that exports of consumer goods, including clothing and footwear, continued to contract, signalling weak global demand.

The Chinese yuan CNY= traded 0.2% higher. CNY/

The emerging markets stocks benchmark index .MSCIEF fell 0.2% as bourses in South Africa .JTOPI , Hungary .BUX and Poland .WIG20 also sagged between 0.06% and 0.4%. Stocks in Turkey .XU100 and Russia .IMOEX , however, managed gains.

For GRAPHIC on emerging market FX performance 2020, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance 2020, see https://tmsnrt.rs/2OusNdX

For TOP NEWS across emerging markets CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB

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https://tmsnrt.rs/2L8Tkhe

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