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.
The Eurovision Song Contest has seen a surge in punter interest at the bookmakers, becoming a major betting event, experts said ahead of last night’s giant glamfest in Basel. “Eurovision has quietly become one of the biggest betting events of the year,” said Tomi Huttunen, senior manager of the Online Computer Finland (OCS) betting and casino platform. Betting sites have long been used to gauge which way voters might be leaning ahead of the world’s biggest televised live music event. However, bookmakers highlight a huge increase in engagement in recent years — and this year in particular. “We’ve already passed 2023’s total activity and
Nvidia Corp CEO Jensen Huang (黃仁勳) today announced that his company has selected "Beitou Shilin" in Taipei for its new Taiwan office, called Nvidia Constellation, putting an end to months of speculation. Industry sources have said that the tech giant has been eyeing the Beitou Shilin Science Park as the site of its new overseas headquarters, and speculated that the new headquarters would be built on two plots of land designated as "T17" and "T18," which span 3.89 hectares in the park. "I think it's time for us to reveal one of the largest products we've ever built," Huang said near the
China yesterday announced anti-dumping duties as high as 74.9 percent on imports of polyoxymethylene (POM) copolymers, a type of engineering plastic, from Taiwan, the US, the EU and Japan. The Chinese Ministry of Commerce’s findings conclude a probe launched in May last year, shortly after the US sharply increased tariffs on Chinese electric vehicles, computer chips and other imports. POM copolymers can partially replace metals such as copper and zinc, and have various applications, including in auto parts, electronics and medical equipment, the Chinese ministry has said. In January, it said initial investigations had determined that dumping was taking place, and implemented preliminary
Intel Corp yesterday reinforced its determination to strengthen its partnerships with Taiwan’s ecosystem partners including original-electronic-manufacturing (OEM) companies such as Hon Hai Precision Industry Co (鴻海精密) and chipmaker United Microelectronics Corp (UMC, 聯電). “Tonight marks a new beginning. We renew our new partnership with Taiwan ecosystem,” Intel new chief executive officer Tan Lip-bu (陳立武) said at a dinner with representatives from the company’s local partners, celebrating the 40th anniversary of the US chip giant’s presence in Taiwan. Tan took the reins at Intel six weeks ago aiming to reform the chipmaker and revive its past glory. This is the first time Tan
RSS