EM Contagion Fears Support Safe Havens

Monday, August 13 – Asia Session Recap

During the Asia-Pacific session, the market was firmly focused on TRY which continued its sell-off following a defiant tone from President Erdogan.  USDTRY initially rallied over 10% until Turkey’s banking regulator placed a limit on FX swaps, helping to cap the market at the 7.0000 handle.

Furthermore, the market’s sell-off of TRY spread to other EM currencies with ZAR falling by around 10%, a 2-year low while IDR declined to a 3-year low.

As such, both USD and JPY have strengthened on safe-haven flows. EURUSD gapped lower at the open to trade firmly below the 1.14 handle while EURJPY gapped below the 126.00 handle at the open.

For additional research, we’ve posted news articles from around the web below.