HONG KONG: Asian and European markets tumbled and the Turkish lira dived almost 8% yesterday on fears that the economic crisis gripping Turkey could spill over into the global economy.
With investors already on edge over the China-US trade war, the lira’s collapse sparked a sell-off in Europe and New York at the end of last week, with safe haven assets including the Japanese yen and Swiss franc rallying.
The lira dived to a record low of 7.24 to the dollar at one point overnight before recovering slightly after the country’s finance minister said Ankara was planning to roll out an “action plan” in response to the crisis. That was followed by the central bank saying it as ready to take “all necessary measures” to ensure financial stability, easing reserve requirements for lenders and promising to provide them with liquidity.
“Our i nstitutions will take necessary action from Monday in order to relieve the markets,” Berat Albayrak said, adding that the plan would centre on “the state of our banks and the small- and mediumsize enterprises” most affected by the lira’s plunge.
“The ‘Turkey shock’ from last weekend, triggered by sharp plunges of the lira, has fuelled fears that it may impact financial institutions in Europe,” Okasan Online Securities said in a note to clients..
On equity markets, Kuala Lumpur lost 1.24%, Hong Kong shed 1.5% and Shanghai finished 0.3% lower, while Tokyo dropped 2% with exporters hurt by the stronger yen.
Sydney fell 0.4%, Singapore was 0.8% lower and Seoul shed 1.5%.
There were also sharp losses in Taipei, Manila and Jakarta, which dived 3.3% after Indonesia reported Friday its biggest current account deficit i n about four years. – Reuters
Source: pressreader.com