Moody's Downgrades, Central Bank Liquidity Tightening Push Turkish Lira Down 3%

The Turkish lira tumbled more than 3.00% against the dollar on Wednesday after Turkey’s central bank doubled banks' borrowing limits in the interbank money market, which effectively tightens liquidity:
"In the light of recent evaluations, the CBRT has decided that, to be effective from 29 August 2018, the banks’ borrowing limits for overnight transactions at the Interbank Money Market established within the CBRT would be twice the limits applicable before 13 August 2018.", said the Turkish central bank.
Turkey’s central bank tried to halt the drop of the lira earlier this month by lowering the Turkish banks’ FX reserve requirement from 45% down to 40%, but the lira’s fall accelerated following that announcement.

On a flight from Paris, Berat Albayrak, the financial minister of Turkey, told Turkish media today that he does not see “big risk about Turkey’s economy or financial system.”

But while Turkey's finance minister sees no “big risk,” ratings agencies are already starting to downgrade Turkish banks and government bonds.

American rating agency Moody's downgraded 18 Turkish banks and two finance companies today, citing deteriorating investor sentiment, and a “substantial increase in the risk of a downside scenario.”

At the height of today’s sell-off, the lira was down approximately 3.4% against the dollar, trading at 6.4832 lira to the dollar. At press time, the USD/TRY currency pair is floating at 6.4500.

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Mexican Peso, Canadian Dollar Surge as President Trump Announces New Trade Deal with Mexico

The U.S. dollar took a tumble today as President Trump announced a trade deal with Mexico that would replace NAFTA.

The Dollar Index tumbled to a 16-day low of 94.60, while the Mexican peso was up as much as 1.56% on Monday against the dollar, trading at 18.60 pesos to the dollar.

“We’re going to call it the United States-Mexico Trade Agreement, and we’ll get rid of the name NAFTA.,” U.S. President Trump explained.

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The Canadian dollar also gained on Monday, trading as high as 1.2953 against its American counterpart, after President Trump and President Pena Nieto made positive remarks on upcoming trade negotiations:

“It is our wish, Mr. President, that now Canada will also be able to be incorporated in all this. And I assume that they going to carry out negotiations of the sensitive bilateral issues between Mexico — rather, between Canada and the United States.,” said President Nieto.

"Canada will start negotiations shortly. I’ll be calling the Prime Minister very soon. And we’ll start negotiation, and if they’d like to negotiate fairly, we’ll do that.," said President Trump.

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Australian Dollar Gains as Scott Morrison Voted in 30th Prime Minister of Australia

The Aussie dollar made a dramatic recovery on Friday, erasing almost all losses incurred on Wednesday and Thursday, after prime minister Malcolm Turnbull was ousted by Liberal party lawmakers.

Turnbull’s replacement, Treasurer Scott Morrison, defeated right-wing candidate Peter Dutton by just five votes.

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In the first hour following Morrison’s win, the Aussie dollar gained about 0.50% percent against the USD, rallying from 0.7250 to 0.7290.

The AUD continued to rally into the New York trading session, gaining an additional 0.75%. At press time, the AUD/USD currency pair is trading at 0.73307, up 1.13% on the day.

While Morrison's win saved the currency from plunging to fresh yearly lows, it remains to be seen if his leadership and policies will be sufficient to reverse the downtrend of the Aussie dollar this year. On Aug. 15, the Aussie dollar hit an 8-month low of 0.72025 against the U.S. dollar:

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Bitcoin P2P Trading Platform Paxful Sees Rising Volumes Despite Crypto Bear Market

Although the price of bitcoin, as well as many other cryptocurrencies, has been in decline since the start of the year, investor and consumer interest in the space has not plateaued.

Volumes on P2P trading site Paxful, which allows consumers to buy/sell bitcoin via gift cards, as well as PayPal and many other online payment methods, have been steadily climbing this year.

According to data accumulated by, weekly Paxful trading activity in Australia, Canada, Europe, New Zealand, United Kingdom and the United States, rose to new all-time highs in July and August:

USA: $21.3 million ATH volume for the week of 2018-08-04

Canada: CAD$1.15 million ATH volume for the week of 2018-07-14

Australia: AUD$617k ATH volume for the week of 2018-07-14

Bitcoin trading activity on LocalBitcoins, the most popular venue for cryptocurrency traders, which began to KYC all of its users back in April, has declined this year in most countries.

However, in countries with a currency crisis like Argentina and Venezuela, LocalBitcoins volumes have continued to grow despite the KYC hurdles.

Argentina: 6 million Argentine peso volume (new record) on LocalBitcoins for the week of 2018-08-11

Rising Inflation and Foreign Investment Lift Canadian Dollar

Encouraging figures from Statistics Canada on Friday gave the Canadian dollar a boost of more than 0.50% against its American counterpart.

According to Statistics Canada, consumer prices rose 3.0% YoY in July. The metric was well above analysts’ forecasts of 2.5%.

Currency speculators and market participants also reacted well to the large increase in foreign investment into Canadian securities, which came in at 11.55 billion for the month of June. Analysts had only predicted 4.91 billion!

The CAD was up close to 0.58% against the dollar at the height of Friday's surge, trading at 1.306 CAD per USD.

At press time, the USD/CAD currency pair has stabilized around 1.3085.

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Retail Forex Brokers Halt Trading in Lira as Turkish Currency Crisis Intensifies

Tickmill, a retail CFD and Forex broker with offices in Europe and the United Kingdom, blocked all of its clients from opening new speculative positions on all TRY (Turkish lira) currency pairs.

In an email to all clients, Tickmill explained that "political turmoil in Turkey" has created "uncertain market conditions."
"We are switching USDTRY, EURTRY and GBPTRY to "Close-Only" mode.," said the email.
Turkey's currency has been losing value since the start of the year due to raging inflation, declining economic output and surging import prices.

And while the central bank of Turkey attempted to halt the lira's plunge on Monday by reducing the currency reserve requirement on domestic banks from 45% down to 40%, the recent sanctions levied on the Turkey by the United States have greatly accelerated the lira's fall.

Just today, the lira dropped 2.70% to a new all-time low of 5.7558 against the dollar. Including today's drop, the lira has lost more than 53% of its value since the start of the year!

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Russian Ruble Tumbles After Details of New U.S. Sanctions Leaked by Russian Media

The Russian ruble suffered significant losses on Wednesday after a Russian news outlet, Kommersant, released full details of a U.S. bill seeking a new set of very severe sanctions on Russia for election meddling.

The new bill aims to impose sanctions on Russian sovereign debt, as well as blocking dollar-based transactions of Russia’s largest banks. Sberbank, VTB Bank, Gazprombank, Bank of Moscow, among others, are named in the bipartisan bill.

At press time, the ruble is down close to 2.5% against the U.S. dollar on the day, trading at a 4-month low of 65.13 rubles per dollar:

While the bill has plenty of biting provisions within it, the Russian economy/government will not feel any of its effects until the House is able to vote in September.

Senior economist & strategist at Danske Bank, Vladimir Miklashevsky, said on Twitter that the ruble will incur significant losses if the bill becomes law.

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British Pound Slides to Lowest Level in 11 Months as Brexit Negotiations Deteriorate

The British pound sold-off on Monday to its lowest level in 11 months amid rising worries over Brexit.

The pound came under strong pressure following an interview of Britain’s international trade secretary, Liam Fox, who told The Times that there is “60‑40” chance of failed Brexit negotiations.

During the interview, Fox also accused the European political elite of putting “theological obsessions” ahead of the economic stability and well being of the union.

Fox’s comments sent the pound tumbling on Monday to an 11-month low of 1.2920. At press time, the GBP/USD currency pair is floating slightly above the day’s lows at 1.2945.

The pound also lost ground against the euro during Monday’s trading session. The EUR/GBP pair closed at 0.89256 - a drop of approximately 0.33% for the pound.

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Turkish Lira in Free Fall as Central Bank Scrambles to Boost Liquidity

In a bid to halt the lira’s plunge, the Turkish central bank lowered the FX reserve requirement on Monday from 45% down to 40%:

“With this revision, approximately $2.2 billion of liquidity will be provided to banks.,” said Turkey’s central bank.

While the unexpected news caught currency traders off guard, briefly halting the sell-off, the lira’s plunge accelerated following the announcement.

So far today, the lira is down 3.8% against the U.S. dollar, trading at a new all-time low of 5.28 lira to the dollar:

Investor confidence in Turkey's economy and currency has deteriorated significantly since the re-election President Erdogan, who has repeatedly called on the central bank to maintain low interest rates, despite surging inflation, declining economic output and rising import prices.

In its last release on July 31, Turkey's central bank revised its 2018 inflation forecast from 8.4% to a whopping 13.4%.

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Bank of England Hikes Rates, Triggers Sell-Off in the British Pound

The British pound slid on Thursday after members of the Bank of England’s Monetary Policy Committee voted 9-0 to raise interest rates by 25 basis points to 0.75%.

This is only the second time the BoE has voted to raise the benchmark rate since the global financial crisis.

Although the rate hike was expected by most analysts and market participants, the unanonymous vote was not priced into the currency markets.

Selling pressure on the pound increased substantially following the release of BoE’s Inflation Report - released after the decision - which states that British businesses are still most concerned about the potential fallout from a bad Brexit deal:
“But respondents to the 2018 Q2 Deloitte CFO Survey again ranked Brexit as the top risk facing their businesses, and three quarters of respondents expected Brexit to lead to a deterioration in the business environment in the long term, the highest proportion since the referendum.”
Following the report, the pound sold-off more than 0.50% against the U.S. dollar, hitting at an 11-day low at 1.3126.

Ar press time, the GBP/USD currency pair is only about 0.57% away from breaking the 2018 lows at 1.2957, recorded on July 19.

Lira Plunges To All-Time Lows as Washington Readies Sanctions

The Turkish lira hit fresh lows today against the dollar on reports that Washington is prepared to apply sanctions on entities and individual within Recep Tayyip Erdogan’s government for imprisoning and using American Pastor Andrew Brunson, among others, as bargaining chips.

Following the news, the lira lost close to 2.0% of its value in a matter of hours. At press time, the USD/TRY currency pair is trading close to the 5.01 level - a new all-time low for the Turkish currency.

While the Turkish lira has been losing ground against the dollar since the start of the year, today's losses are quite significant for currency traders and market participants as the unexpected news pushed the USD/TRY pair through the psychological barrier at 5.00:

According to unnamed Bloomberg sources, the U.S. government is making use of the Global Magnitsky Act of 2016, which allows for selective targeting of corrupt foreign officials.

The U.S. government also used the Magnitsky Act against Russian President Vladimir Putin, and individuals close to him, in April of this year.

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