Turkey’s lira remained under pressure in Asian trade Tuesday but markets in the region enjoyed a little more stability after the previous day’s turmoil. Nervous investors are keeping an eye on developments in Ankara after Monday’s bloodletting that saw the lira hit record lows against the dollar and euro, and equity markets go into freefall on concerns Turkey’s financial crisis could spread globally. In early Asian trade the Turkish unit was at 6.90 to the dollar and 7.86 to the euro, well off the 7.24 to the dollar and 8.12 to the euro seen Monday but still uncomfortably high. The unit is down about a fifth against the greenback since Friday. The crisis has been sparked by a series of issues including a faltering economy — the central bank has defied market calls for rate hikes — and tensions with the United States, which has hit Turkey with sanctions over its detention of an American pastor. There was some optimism from news that Donald Trump’s national security advisor John Bolton met Turkish Ambassador Serdar Kilic to discuss the detention of the pastor. Traders remain nervous, though, and the central bank’s announcement that it would provide lenders with liquidity and lower the amount of cash they needed to keep in reserve largely disappointed as it made no clear promise of rate hikes, which is what most economists say is needed. Still, Ray Attrill, head of foreign-exchange strategy at National Australia Bank, was hopeful the crisis will not spread. “It’s a large local difficulty, but so far the contagion has been relatively limited, he told Bloomberg Television. “We’re seeing a little bit of signs of contagion within the eurozone, within the spreads of those government bonds in countries where the banking sector appears to have the biggest exposure as far as Turkey is concerned. You’d have to say that Turkey is relatively contained.” Rupee at record low On equity markets Tokyo was 1.9 percent higher in late trade as the safe haven yen eased against the dollar, providing some support to exporters. Sydney added 0.7 percent and Seoul was 0.5 percent higher, with Wellington, Mumbai and Taipei also up. But Shanghai was 0.6 percent lower and Hong Kong slipped 1.1 percent. Emerging market currencies, which took a battering Monday, also managed to eke out some gains, with South Korea’s won up 0.3 percent after losing almost one percent against the dollar. And the Russian ruble, Mexican peso and South African rand climbed between 0.9 percent and 1.3 percent. However, the Indian rupee fell to a record low of 70 to the dollar. The Turkish crisis has added fuel to a sell-off in the unit, which was already under pressure from a huge current-account deficit, which has been exacerbated by higher oil prices. There remain concerns about how the crisis will pan out, with Turkish President Recep Tayyip Erdogan in combative mood, accusing the US of plotting against his country, and warning that unless Washington can “reverse this trend of unilateralism and disrespect” Turkey will “start looking for new friends and allies”. But for now analysts are broadly upbeat that Monday’s plunge would not be repeated. And Kengo Suzuki and other forex strategists at Mizuho Securities added: “Excessive risk avoidance is likely to recede (on Tuesday) with a lull in the Turkish lira’s plunge, but a wait-and-see mood will remain strong.” Key figures Dollar/Turkish lira: DOWN at 6.90 lira from 6.96 lira late Monday Euro/Turkish lira: DOWN at 7.86 lira from 7.94 lira Euro/dollar: DOWN at $1.1403 from $1.1405 Pound/dollar: UP at $1.2765 from $1.2763 Dollar/yen: UP at 110.83 yen from 110.63 yen Tokyo – Nikkei 225: UP 1.9 percent at 22,273.01 Hong Kong – Hang Seng: DOWN 1.1 percent at 27,624.35 Shanghai – Composite: DOWN 0.6 percent at 2,786.64 Oil – West Texas Intermediate: UP 27 cents at $67.47 per barrel Oil – Brent Crude: UP 20 cents at $72.81 per barrel New York – Dow Jones: DOWN 0.5 percent at 25,187.70 (close) London – FTSE 100: DOWN 0.3 percent at 7,642.45 (close). Published in Daily Times, August 15th 2018.