Wall Street Goes Long Lira in Optimism on Turkey Policy Reversal
Citigroup Inc. and JPMorgan Chase & Co. are among banks recommending buying the Turkish lira as the spread between offshore and onshore yields widens, signaling foreign investors betting on the currency via derivatives.
The lira rose as much 0.8% against the dollar as of 2:20 p.m. on Monday, extending gains to a third day. The offshore overnight implied yield on the lira was trading at 45.5%, well below onshore rates of 52.5% as of Friday. Dropping forward yields offshore implies that investors abroad are buying the lira against the dollar or unwinding short-lira positions which had surged ahead of local elections in March.