(Reuters) – The Turkish lira hit a new record low against the US dollar on Wednesday amid deteriorating relations between Ankara and Brussels, while most other emerging market currencies are stable despite fading hopes for new stimulus in the US.
The Turkish lira fell 1% on fears of the conflict in the Caucasus and possible US sanctions, while the European Union said the chances of Turkey joining the bloc were dwindling.
In addition, Turkey's heavily tourism-dependent economy has been hit hard by the coronavirus pandemic. Higher inflation and a second wave of the global epidemic are expected to make it difficult for the country's economy to recover.
“The perfect storm is hitting Turkey right now … It is one of the most vulnerable emerging markets in the world due to a very fragile institutional structure and very high external financing needs,” said Jacob Christensen, senior analyst at Danske Bank.
Turkish stocks lost about 0.2%.
Other emerging market currencies have strengthened in the hope that eventually US stimulus will be taken despite President Donald Trump's sudden decision to cut off stimulus negotiations until the November 3 presidential election.
The South African rand rose sharply after declining in the previous two sessions.
Emerging market equities rallied weakly, holding more than two weeks high on the back of some Asian markets.
Central European equity markets are marginally higher and their currencies are weak against the euro.
(Embar Warrick. Translated by Vladimir Sadykov. Editor Anna Kozlova)