An analyst response to the plummeting Turkish Lira in the wake of Turkey's central bank governor getting fired:
- "In terms of impact on other parts of the high-yielding EM, we believe that will be quite limited"
The quote is conveyed via Reuters (the bank cannot be named). The other thing to do with this quote is to translate it to impact on DM currencies. Sure there was a knee-jerk response in extremely illiquid Monday Asia morning early trading with flows to the USD and yen (haven flows). USD/JPY has now completely retraced its drop and FX such as EUR/USD, AUD/USD and others are in the process of retracing. I pointed this out hours ago:
Idiosyncratic developments at the bat-**** crazy end of the EM spectrum do not have persistent impacts on developed markets.
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Background (read from the bottom up for chronology:
- Remember when everyone on Earth bought toilet paper? TRY is nothing like that today.
- Globex Sunday evening trade opens, US equity index futures open the week a touch lower
- Plenty of early Asia FX gaps on TRY drama
- Turkish lira has opened (in super-thin trade) much lower after central bank head sacked
USD/JPY covered the TRY-induced gap with ease:
