Turkey’s lira, bonds improve, banks still lag; Argentina tighter as peso closes flattish

By Rebecca Melvin

New York, Aug. 14 – Turkey’s currency recouped about 5% and bonds improved on Tuesday, although Turkish bank debt denominated in hard currencies still lagged, and an impasse between Turkish and U.S. officials over detained American pastor Andrew Brunson continued.

On Tuesday, the lira bounced back to 6.53 to the U.S. dollar, which was an improvement from 6.9 late Monday and as low as 7.24 earlier Monday.

Meanwhile, the Argentine peso did not respond meaningfully to measures to stabilize that currency. But Argentina’s sovereign bonds saw strong spread tightening on Tuesday.

There was outperformance in Argentina’s front end with tightening of 100 basis points, while tightening in the belly of the curve was by about 50 bps and by about 40 bps in the long end, a New York-based market source said.

Spreads have not recovered the whole of widening that took place in the last several sessions, the source said. But it was a meaningful rally.

The Argentine peso was “closing flattish to the opening of the session, while the Turkish lira recovered some losses,” the market source said. “I think the market is digesting recent announcements by the central bank and trading on the back of that. We have yet to see if the trend sustains.”

Elsewhere, there were improvements in emerging markets debt overall, a London-based trader said.

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