Turkish lira in deep trouble after another crash

The apparent 17 per cent dive for Turkey's lira has wiped out returns for those who bought into a tempting carry trade and cranked up downside risks for the currency.

Several months of relative calm and ultra-high interest rates squeezed out most of those short the lira, but the few minutes it took for TRY to unwind all gains made since rates hit 24 per cent in September will have wiped out any lira bulls.

Few traders will be eager to take such risk again. Even fewer, if any, are now well hedged for a resumption of the lira's downtrend.


The 5.000 mark that was the trigger for the summer's huge rally held as a support and remains the critical point, beyond which the lira is unlikely to rise without positive change for Turkey's economy.

With volatility in FX, stocks and commodities soaring, EM FX is best avoided. A liquid and high-yield USD is more likely to do well.