Lira weakens after the first round of presidential elections in Turkey, EM shares rise

May 15 (Reuters) – The Turkish lira fell to a two-month low on Monday as domestic credit default swaps jumped amid tense presidential elections, while emerging-market equities snapped a four-day losing streak.

Turkey’s presidential election has entered its second round after neither incumbent head of state Tayyip Erdogan nor opposition candidate Kemal Kılıçdaroğlu passed the 50% threshold required to win.

At 11:28 am Moscow time, the Turkish lira fell 0.5% to 19.66 to the dollar.

The Istanbul Stock Exchange halted trading after the main stock index fell more than 6%.

The election results were a disappointment for investors who had hoped for a shift to a more conservative monetary policy amid the problems facing the Turkish economy, including runaway inflation, a sharp depreciation of the lira and devastating earthquakes earlier this year.

“If the opposition candidate were to win a decisive victory, the lira would strengthen, and this would be based on the assumption that the opposition candidate would return to conservative (monetary) policies, restore investor confidence and attract public and private capital flows. said Elliot Hentov of State Street Global Advisors.

The MSCI Emerging Markets index gained 0.5%.

Emerging market currencies changed slightly.

The Hungarian forint lost 0.22% against the euro and the Polish zloty gained 0.13%.

The Czech koruna remained at 23.59 against the euro.

The South African rand rose 1.6% to 19.04 to the dollar, recovering from all-time lows reached last week after the worst blackouts in history.

Sentiment towards the currency improved after South African officials denied allegations of Russian arms sales and President Cyril Ramaphosa on Monday confirmed the country’s neutral stance.

The yuan was stable around 6.952 in the continental market and rose 0.16% to 6.9598 in the offshore market.

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