The biggest selloff in emerging- market debt since 2008 is hitting Turkey hardest as unrest in the Middle East threatens to widen the country’s current-account deficit and boost inflation.
The nation’s foreign-currency bonds have dropped 7.9 percent since the end of October, leading a slide in developing- nation debt, according to JPMorgan Chase & Co. Government securities in lira lost 10 percent for dollar-based investors in the period as the currency touched an eight-month low. Credit- default swaps on Turkey jumped to 174 basis points from 133, the biggest advance among 16 emerging markets, CMA prices show.
Political turmoil from Libya to Oman is lifting the cost of oil imports and curbing demand from a region that buys about 27 percent of Turkey’s exports. The January trade gap was 78 percent wider than the median estimate in a Bloomberg survey of economists, government data showed yesterday. Interest-rate cuts since December aimed at narrowing the shortfall by depreciating the lira have dented the appeal of fixed-income assets on concern inflation may jump from a record low.
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