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EMTurkeys Lira Pressured by Policy Worries

Feb 23 Reuters Turkeys lira lagged most emergingmarket currencies on Tuesday amid debates in the government on foreignexchange policy, while Brazilian assets were being closely watched after outflows on fears of political interference in staterun companies.

The lira fell 0.1 after posting its worst day since midJanuary on Monday.

Markets showed some concern over the governments defending policies of Berat Albayrak, a former finance minister and President Tayyip Erdogans soninlaw, that saw a sharp decline in foreign exchange reserves. Some saw that as a sign that Albayrak could make a return.

The story that Albayrak could return in some capacity is new and one that investors will be monitoring closely, said Piotr Matys, senior FX strategist for central and eastern Europe at Rabobank.

But he added that the main source of support, such as high interest rates and commitment to maintaining tight monetary policy, remain intact, and the days move could be a correction after the liras impressive run over the past few months.

In Brazil, news that President Jair Bolsonaro fired the head of staterun oil company Petrobras roiled markets. Investors took the move as a sign that some of Bolsonaros marketfriendly initiatives may be rolled back.

Brazilian markets had their worst day since the autumn. The Bovespa index lost almost 5 with staterun companies leading the declines. Petrobras finished the day down 21.

Bolsonaro is clearly adopting many of the populist policies of the…

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