The darling of the carry trade has been the Turkish lira. It fulfills two criteria: It is an emerging market and it has a high yield.
The yield is a bit less attractive in the wake of a cut from the Turkish central bank by 50 bp to 7.25%. The move was seen as a 50/50 proposition.
The Bank says it will maintain its easing bias for a long time.
If there is profit-taking on long USD/TRY positions, the dollar could see a modest renaissance. Emerging markets are giving back gains in a fairly uniform way today, a warning sign for the majors.
