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Turkey's lira hits two-month low, equities fall
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Turkey headed for runoff vote on May 28
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Thai baht rallies after opposition secures win
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South Africa's rand recovers from record lows
By Amruta Khandekar May 15 (Reuters) - Turkey's lira hit a two-month low on Monday and the country's credit default swaps jumped as a tightly-contested presidential election headed towards a runoff vote, while broader emerging market equities snapped a four-day losing streak. Turkey's elections appeared set for a runoff vote, to be held on May 28, after President Tayyip Erdogan led over his opposition rival Kemal Kilicdaroglu, but fell short of an outright majority in Sunday's election - an event seen as the biggest political challenge to Erdogan's 20-year rule. The lira weakened to 19.70 versus the dollar in the opening hours, Turkey-issued dollar bonds fell by more than 5 cents and the cost of insuring exposure to the country's debt spiked on Monday. Borsa Istanbul issued a market-wide circuit breaker after the benchmark index dropped more than 6% in pre-market trading. The election results came as a dissapointment to investors hoping for a shift to a more orthodox monetary policy amid recent challenges plaguing the Turkish economy including runaway inflation, a searing drop in the lira and devastating earthquakes earlier this year. "Had the opposition candidate won outright, you would have seen an appreciation in the lira and that would have been based on the assumption that the opposition candidate would return to orthodox policy, restore investor confidence and attract public and private sector capital flows," said Elliot Hentov, head of macro policy research, State Street Global Advisors.
The Thai baht climbed nearly 1% after the country's opposition secured a stunning election win on Sunday, trouncing parties allied with the military. Broader emerging market stocks rose 0.4%, while currencies were flat. The South African rand gained 1.5%, recovering from all-time lows hit last week after the worst power cuts on record and on allegations of arms shipment to Russia.
Sentiment towards the currency has improved after South African officials rejected the allegations, with President Cyril Ramaphosa stating on Monday the country's non-aligned position did not favour Russia over other states.
In other news, Pakistan's external financing requirements have not been changed in talks with the International Monetary Fund (IMF) over bailout funds, the IMF Resident Representative in Pakistan said, denying local media reports that the Fund was seeking fresh financing.
For GRAPHIC on emerging market FX performance in 2023, see For GRAPHIC on MSCI emerging index performance in 2023, see For TOP NEWS across emerging markets For CENTRAL EUROPE market report, see For TURKISH market report, see For RUSSIAN market report, see (Reporting by Amruta Khandekark; Editing by Sherry
Jacob-Phillips)
