Turkish Lira Rose 1.5% to August Levels

The Turkish lira rose 1.5% on Monday, to its highest level since August, while a measure of risk retreated to near its lowest level in a year, supported by a tightening monetary tone from the central bank and data indicating a further recovery in manufacturing industries.

The currency has outperformed its emerging market counterparts, with the exception of the Chinese yuan, since the beginning of the year after the new central bank governor, Naji, raised interest rates to 17% from 10.25% since November, and pledged to confront inflation, which has become double-digit.

In its best daily performance this year, the lira jumped against the dollar to 7.2025, its best level since August 11. And made a rise in seven of the last nine trading sessions.

The five-year credit swap contracts, a measure of investment risk, have fallen significantly since Iqbal’s appointment in early November to 304.5 basis points today. Turkey’s credit swap contracts were above 500 for most of last year.