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The Turkish Lira's Surreal 1500 Pip, Six-Hour Roundtrip

Submitted by Tyler Durden on 01/27/2014 08:16 -0400

The last time the Turkish Central Bank announced, after the fact, it has failed to intervene decisevely in FX markets, the country's currency collapse became a vivid example of what happens when monetary collapse looms and the monetary authority is unable to do anything about it. This morning, things got even more surreal after the Turkish lira cratered from 2.32 to a record low against the dollar, just shy of 2.39, when at 5:30 Eastern time, the Turkish CB decided to do what Draghi, Bernanke et al are so good at doing: threaten with some unknown future action, in the process spooking everyone into covering shorts. To wit:

TURKEY CENTRAL BANK TO ANNOUNCE DECISION MIDNIGHT TOMORROW
TURKEY CENTRAL BANK TO HOLD EXTRAORDINARY MEETING TOMORROW
TURKEY CENTRAL BANK MONETARY POLICY COMMITTEE TO MEET TOMORROW

What happened next was the most dramatic ramp in the USDJPY since December 30 for sure, and perhaps in history, when the pair plunged by 800 pips in the matter of hours.

Here is some more from the WSJ:

The Turkish lira rebounded strongly Monday after the central bank said it would schedule an extraordinary policy meeting on Tuesday to evaluate recent developments and take necessary measures to ensure price stability.

In a statement, the central bank said the decision would be published midnight local time (2200 GMT) on Tuesday. The news appeared to be interpret as a signal that Ankara would raise interest rates aggressively, sending the lira 2% higher at 1100 GMT.

Analysts said that failure to deliver significant increase in interest rates could spark a broad selloff. "They have to hike…and aggressively," said Tim Ash, emerging markets economist at Standard Bank in London.

...
Last week, the central bank intervened directly in the currency markets for the first time in two years in an attempt to shore up the lira by spending precious foreign currency reserves.

Well, the hopes and prayers of the entire EM and DM world are now in the hands of Turkey. Make us proud, oh not quite European nation's central bank and part with some more of your USD reserves in a way that would make Argentina proud. Hopefully in the process PM Erdogan does not do to you what he has so far done to anyone who has questioned his authority or inquired into corruption charges involving the Turkish oligarch: hand them a pink slip.

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Mon, 01/27/2014 - 08:20 | 4370703 new game

investing agaist the printers-some never learn; ouch...

Mon, 01/27/2014 - 08:34 | 4370719 GetZeeGold

For a second I thought about getting into Turkish Lira.....but thankfully that thought passed quickly.

Mon, 01/27/2014 - 08:25 | 4370705 AdvancingTime

The games central bankers are playing in supporting their and other currencies has reached a dangerous level, we may be in the "red zone". Currencies are important chips in the commerce of government and the business of running a country. History has shown that in the past both leaders and governments have fallen with the demise of their coin. The volume of trades, the sheer magnitude of monies flowing back and forth across borders has become staggering. This area of finance has become the worlds largest casino, where players have the potential to quickly suffer staggering losses. Hold on to to your hat it may get rough, more below,

http://brucewilds.blogspot.com/2013/01/currencies-games-in-danger-zone.html

Mon, 01/27/2014 - 08:24 | 4370708 odatruf

Why did Constantinople get the works?
That's nobody's business but the Turks

Mon, 01/27/2014 - 08:25 | 4370709 Sudden Debt

if a boner lasts more than 4 hours you better see a doctor so a 3.5 hours rise was just in the save zone

Mon, 01/27/2014 - 09:02 | 4370748 Cookie

Mail Online's homepage has had a story about a woman's 3 hour orgasm for the last month or so

Mon, 01/27/2014 - 08:30 | 4370715 decisiveinvesting

Some time ago I used to spent a lot of time on watching market news. I lost my nervous, time and money. Fortunatale there is a better way to make money.

Mon, 01/27/2014 - 09:12 | 4370722 GetZeeGold

Well......we're waiting.

http://www.youtube.com/watch?v=VQFxmAdyKcg

Member for 1 week 6 days......PS.....we all know about CNBC. I've switched to Fox Business since I heard Maria was going over there. Plus they have the all access pass at Davos.....which kinda ROCKS!

Mon, 01/27/2014 - 08:37 | 4370723 disabledvet