ISTANBUL, Aug 13 (Reuters) – Turkey’s lira weakened more than 1% on Tuesday, declining for a third straight trading session, as investors remain cautious of emerging markets after the Argentinian peso fell to a record low against the dollar.
The lira stood at 5.6245 against the dollar at 1217 GMT, down some 1.1% from Monday’s close of 5.5630. Earlier, it declined as far as 5.6360, it’s weakest level since July 29.
Tuesday is a public holiday in Turkey for Eid al-Adha.
Argentina was in the spotlight on the global forex market after a victory by centre-left opposition leader Alberto FernÃ¡ndez in Sunday’s primary election raised concerns he could roll back President Mauricio Macri’s business-friendly agenda if he won October’s presidential vote.
The results sent a shockwave through markets on Monday, with the peso plunging 30% to a record low before recovering slightly.
Refinitiv data showed Argentine stocks, bonds and the peso had not recorded this kind of simultaneous fall since the South American country’s 2001 economic crisis and debt default.
Guillaume Tresca, senior emerging market strategist at Credit Agricole, said the developments in Argentina had reminded investors of the fragility of some emerging market economies and that the global environment was currently not supportive of emerging markets.
He said the lira’s gains in recent weeks had been opportunistic and they were not led by an improvement in fundamentals.
The currency had risen despite a larger-than-expected rate cut by the central bank last month, as well as potential U.S. sanctions over Ankara’s purchase of the Russian S-400 missile defence systems.
The lira had firmed as far as 5.4515 to the dollar on Thursday, its strongest since April, supported by expectations of looser monetary policy from the U.S. Federal Reserve and the European Central Bank.
“The move in July was surprising. So, now to see some consolation especially in a weaker environment is not really surprising,” Tresca said. (Reporting by Ali Kucukgocmen; Editing by Alison Williams)