After the sell wave for stocks and currencies that reached $1.6 trillion in emerging markets, the Turkish central bank decided to raise interest rates by more than double to rescue the local currency from a sever drop. Interest rate in Turkey rose to 10% from 4.5%, pushing the Turkish lira 3 .1% up to the highest since 2008. This came along with India`s decision to raise interest on Tuesday, which helped to regain confidence in emerging markets. Moreover, Malaysia`s and South Africa`s currencies inclined after the Turkish central bank`s decision, in addition to an rebound in Asian stocks markets, which pushed the MSCI Asia Pacific Index up 0.8%, after reaching the lowest in five-month. Turkey`s fast and unexpected decision will be pressuring emerging nations to take the same road in the coming period in order to offset losses took place earlier. The change in monetary policy in emerging markets had an effect on major currencies, as the Japanese yen continued to fall against dollar and other majors, since demand for the Japanese currency as a safe haven declined. On the other side, the Australian dollar and New Zealand dollar gained, as they are considered high yielding currencies. Regarding euro and the British pound, their performance was stable with markets are waiting for the new Fed`s decisions today. Expectations are referring to further monetary stimulus cuts similar to the decision taken in the last Federal Reserve meeting in 2013. USD/JPY gained to record a high of 103.43, while the pair is currently hovering around 103.20. As for EUR/JPY, it picked up to 141.24, while it is currently trading around 140.97. The Australian dollar rose for the third straight day against the American dollar to record the highest this week at 0.8824, while the pair is now trading around 0.8799. New Zealand dollar inclined against the federal currency as well to record the highest this week at 0.8302, and now it is hovering around 0.8288.
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