The Turkish lira yesterday plunged as much as 12 percent against the yen, forcing Japanese investors to liquidate positions in one of their favorite emerging-market trades for the second time this year.
Much of the lira’s sell-off happened at about 7:20am in Tokyo, when Japanese margin-trading firms typically start closing lossmaking client positions.
Net lira-yen longs held by margin accounts rose last week to the highest level since the middle of June, Tokyo Financial Exchange Inc data showed.
The drop exacerbated after a tit-for-tat exchange of tariffs by China and the US on Friday spurred a rush for haven assets.
Earlier this year, yield-hungry Japanese retail investors were also caught in a flash crash, when the yen in January surged against every currency tracked by Bloomberg during the so-called witching hour of the Asian morning.
“Margin accounts have recently accumulated lira longs,” said Toshiya Yamauchi, chief manager for foreign-exchange margin trading at Ueda Harlow Ltd in Tokyo. “Given the lira’s nature as a high volatility currency, the surge in the yen must have triggered stop-losses this morning.”
The lira plunged to a low of 16.1485 against the yen, before paring most of its slide.
It traded down 1.3 percent at 18.0680 as of 3:18pm in Tokyo.
The early slide was also echoed in other currency pairs, with the lira dropping as much as 9.9 percent against the US dollar.
The Turkish currency was the most actively traded emerging-market currency by Japanese retail investors last month, with ￥1.39 trillion (US$13.2 billion) worth of lira-yen traded that month, according to the latest data from the Financial Futures Association of Japan.
Japanese margin-trading firms tend to evaluate their client positions every day, typically at about 7am in Tokyo and liquidate them if losses reach certain levels.
As Japanese retail investors are typically thirsty for yield, they tend to accumulate long positions in risk assets, leaving them exposed to a sudden rally in the yen, according to a research paper from the Bank of Japan.
The Turkish central bank last month started unwinding last year’s interest-rate hikes, after Turkish President Recep Tayyip Erdogan replaced the bank’s chief for failing to act in line with his expectations for a rate cut.
A run on the lira saw the currency lose about a quarter of its value during August last year, tipping the economy into its first technical recession in a decade.
Shares of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) came under pressure yesterday after a report that Apple Inc is looking to shift some orders from the Taiwanese company to Intel Corp. TSMC shares fell NT$55, or 2.4 percent, to close at NT$2,235 on the local main board, Taiwan Stock Exchange data showed. Despite the losses, TSMC is expected to continue to benefit from sound fundamentals, as it maintains a lead over its peers in high-end process development, analysts said. “The selling was a knee-jerk reaction to an Intel-Apple report over the weekend,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to remain Apple Inc’s primary chip manufacturing partner despite reports that Apple could shift some orders to Intel Corp, industry experts said yesterday. The comments came after The Wall Street Journal reported on Friday that Apple and Intel had reached a preliminary agreement following more than a year of negotiations for Intel to manufacture some chips for Apple devices. Taiwan Institute of Economic Research (台灣經濟研究院) economist Arisa Liu (劉佩真) said TSMC’s advanced packaging technologies, including integrated fan-out and chip-on-wafer-on-substrate, remain critical to the performance of Apple’s A-series and M-series chips. She said Intel and Samsung
POWER BUILDUP: Powered by Nvidia’s B200 Blackwell chips, the data center would support MediaTek’s computing power demand and business growth, the company said Smartphone chip designer MediaTek Inc (聯發科) yesterday launched a new artificial intelligence (AI) data center with a maximum capacity of 45 megawatts to meet its rising demand for computing power required to develop new advanced chips for AI applications. The company has completed the first-phase computing power buildup at the data center in Miaoli County’s Tongluo Township (銅鑼), providing 15 megawatts of capacity to support its research and development (R&D) capabilities, despite an industrywide shortage of key components, MediaTek said. Supply constraints have plagued a wide range of key components, including memory chips, solid-state drives, power supply units and central
TRANSITION: With the closure, the company would reorganize its Taiwanese unit to a sales and service-focused model, Bridgestone said Bridgestone Corp yesterday announced it would cease manufacturing operations at its tire plant in Hsinchu County’s Hukou Township (湖口), affecting more than 500 workers. Bridgestone Taiwan Co (台灣普利司通) said in a statement that the decision was based on the Tokyo-based tire maker’s adjustments to its global operational strategy and long-term market development considerations. The Taiwanese unit would be reorganized as part of the closure, effective yesterday, and all related production activities would be concluded, the statement said. Under the plan, Bridgestone would continue to deepen its presence in the Taiwanese market, while transitioning to a sales and service-focused business model, it added. The Hsinchu
RSS