Lira strengthens; yuan, Argentina peso weaker; Argentina bonds unchanged to slightly lower

By Rebecca Melvin

New York, Aug. 15 – Despite strengthening of Turkey’s currency for a second straight day on Wednesday, market players were unconvinced that emerging markets were out of the woods, and many other emerging markets currencies were weaker, while emerging markets debt was under pressure as investors turned to low-risk assets like U.S. Treasuries.

The lira was up another 6% on Wednesday on top of a 5% climb on Tuesday as the government has twice taken measures to tighten lira liquidity and curb selling of the currency as well as eased rules on restructuring loans.

China’s yuan fell almost 1% to 6.95 to the U.S. dollar on Wednesday, its weakest level in about 18 months after economic data fed speculation that the People’s Bank of China will intervene with more fiscal stimulus to boost the currency and prevent it from pushing through 7.0 to the dollar. Tighter credit conditions and slowing economics are causing worry for the Asia region.

The Brazilian real and South African rand were also lower on Wednesday.

The Argentine peso did not respond immediately to measures to stabilize that currency. But Argentina’s sovereign bonds were unchanged to slightly lower on Wednesday as the Argentine peso slipped amid ongoing market turmoil tied to devaluation of emerging markets currencies and the strengthening dollar.

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