Turkish lira struggles in Asia but equities see some stability

Turkey's lira remained under pressure in Asian trade today but markets in the region enjoyed a little more stability after the previous day's turmoil.

Nervous investors are keeping an eye on developments in Ankara after yesterday's bloodletting that saw the lira hit record lows against the dollar and euro, and equity markets go into freefall on concerns Turkey's financial crisis could spread globally.

In early Asian trade the Turkish unit was at 6.91 to the dollar and 7.89 to the euro, well off the 7.24 to the dollar and 8.12 to the euro seen yesterday but still uncomfortably high. The unit is down about a fifth against the greenback since Friday.

The crisis has been sparked by a series of issues including a faltering economy -- the central bank has defied market calls for rate hikes -- and tensions with the United States, which has hit Turkey with sanctions over its detention of an American pastor.

There was some optimism from news that Donald Trump's national security advisor John Bolton met Turkish Ambassador Serdar Kilic to discuss the detention of the pastor.

Traders remain nervous, though, and the central bank's announcement that it would provide lenders with liquidity and lower the amount of cash they needed to keep in reserve largely disappointed as it made no clear promise of rate hikes, which is what most economists say is needed.

Still, Ray Attrill, head of foreign-exchange strategy at National Australia Bank, was hopeful the crisis will not spread. "It's a large local difficulty, but so far the contagion has been relatively limited, he told Bloomberg Television.

"We're seeing a little bit of signs of contagion within the eurozone, within the spreads of those government bonds in countries where the banking sector appears to have the biggest exposure as far as Turkey is concerned. You'd have to say that Turkey is relatively contained." - Combative mood -