As growing risk aversion across global markets negatively impacted Turkey’s battered assets, the country’s 10-year bond yield rose to a record high and the lira fell.
The Turkish Treasury is set to auction off two-, six- and
10-year local-currency bonds on Tuesday. This compounds a rout fueled by an intensifying trade row between the US and China. The lira fell over 1%, sliding more than any other emerging-market currency after the South African rand.
The country’s twin deficits and significant external financing requirements mean its markets are quite vulnerable to changes in investor sentiment.
Adding to investors’ concers is uncertainty over the direction of policy after this weekend’s election, which could lead to political instability if President Recep Tayyip Erdogan does not secure a decisive victory.