Japan’s Nikkei fell 1.4 per cent, not helped by talk Japanese retail investors could face losses on large long positions in the high-yielding lira. — AFP picSYDNEY, March 22 — Asian markets were holding their nerve today as a plunge in the Turkish lira tested risk appetite, with stocks and bonds showing only a limited bid for safe-havens.
“Erdogan’s decision to fire Governor Agbal, who had sought to instil some price stability and perception of Bank independence, now raises question as to whether the new Governor will look to lower rates while still aim to fight higher inflation,” said Rodrigo Catril, a senior FX strategist at NAB. Nasdaq futures bounced to be up 0.1 per cent, while S&P 500 futures were off a slight 0.1 per cent. Yields on 10-year Treasury notes edged down a couple of basis points to 1.71 per cent, suggesting no widespread rush to safety.
The damage was limited, however, by the Fed’s promise to work on the rules to prevent strains in the financial system. Also supporting the yen were concerns Japanese retail investors that have built long lira positions, a popular trade for the yield-hungry sector, might be squeezed out and trigger another round of lira selling.