“Long Turkish lira has been a high-conviction carry trade in some of our multi-asset portfolios since June 2024 — we have recently added to the position following a sudden depreciation,” said Wenting Shen, multi-asset solutions strategist and portfolio manager at T. Rowe Price. “We believe this trade still has some legs to run in the coming months.”
The lira was one of the least-buffeted emerging-market currencies in the week of Donald Trump’s victory in the US presidential election last month. Hedge funds turned to the Turkish currency, encouraged by support for the currency from state-run banks and the prospect of juicy returns.
Turkey’s currency and debt are showing little spillover from the threat of tariffs under Trump’s second term, according to Anders Faergemann, co-head of EM global fixed income at Pinebridge.
See also: US dollar posts best week since November as Trump unleashes tariffs
“You can still argue that the lira will weaken or depreciate, but it’s going to be at a measured pace,” Faergemann said. “And with the central bank cutting interest rates, you could argue that maybe you should be looking at bonds as well.”
