The Turkish lira plunged by the Turkish operation in northern Syria, making it the worst performer among the world's major currencies in October, in a move that looks darker given the rise of most emerging market currencies.
Volatility is no stranger to the lira, but it lost 5% this month against the dollar in an extraordinary move to coincide with the MSCI Emerging Markets Index rising 1.3%.
The rise in emerging markets is generally supported by signs that a US-China trade deal is nearing and stimulus measures, but Turkish observers have expressed concern about US sanctions on Turkey for its moves in Syria.
European governments also agreed on Monday to reduce arms exports to Turkey, but without declaring an official EU ban on Ankara.
"I find it hard to see any event that works as a positive catalyst (for Turkey) at the moment," commented Alliance Global Investors' emerging markets expert. "What is happening is absolutely stunning."
Investment bank JPMorgan rated the Turkish lira as one of the most vulnerable currencies to political volatility, while Golden Sachs warned of geopolitical risks and local economic policy.
Source: Reuters
