High Yielding Currencies To Weaken Further

October 2008 | Market Strategy

The Turkish lira is looking decidedly weak, having fallen through a key trendline support level at TRY1.2500-1.2700/US$, to at one point trade at TRY1.3119/US$ on October 3. A move to subsequent support at TRY1.3500/US$ is looking likely on a technical basis. Beyond this point, the fundamental picture is suggestive of further depreciation toward TRY1.4200/US$. We are particularly concerned about the worsening macroeconomic environment in the eurozone and the impact this will have on the Turkish export sector and FDI inflows. Continued uncertainty in global capital markets linked to banking system instability in the UK, eurozone and US will further weigh

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