Lure of huge returns will draw FX investors to Turkey
May 22 (Reuters) -With the prospect of a 50 percent return on the table for cash invested for one year, investors will be drawn to consider investing in Turkey's lira.
Because the lira has stabilized in the wake of the enormous hike in Turkey's interest rate, it is already a more attractive proposition, and those invested in lira this year would have seen a much bigger return on their investment from interest rates than losses resulting from lira's slide.
This year USD/TRY has risen almost 9% which is substantially less than the return due to interest rates in the period. In the month-to-date USD/TRY is down 0.6%. When added to the more than 3% reaped from rate differentials, the rough 4% gain for a three-week investment may be worth the gamble.
Those who dare to buy a currency that fell relentlessly for years might be assured by the positive outlooks recently issued by rating agencies, and the fact that the central bank has persevered with super-tight policies even though the lira has continued to decline.
The lack of political interference may be the most important factor that draws foreign investors, and a trickle of demand for lira might become a flood. Should lira rally, massive interest rate returns will be bolstered, and possibly overshadowed, by the gains from favourable FX movement.
For more click on FXBUZ
USDTRY https://tmsnrt.rs/3URYnGf
(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)
</body></html>Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
