Turkish Lira Carry Trade

Discussion in 'Forex' started by DannyBly1, Feb 18, 2008.

  1. I'm looking at the sizeable 12% interest rate differential on the USD/TRY currency pair.

    I'm thinking this might be a good time to look to position myself short in the USD/TRY to participate in Turkey's economic development over the next year or so -
     
  2. Check out how much carry-trade interests on the Lira YOUR broker actually pays.

    Watch out closely for possible devaluation. It is very possible that the currency may devalue more than 12%, resulting in a net loss.
     
  3. devaluation? Isn't the lira traded in a free market? If yes, how could you use the word devaluation? If it is the case, then it seems as if anything that is foreign to you can be devalued. If it is traded in a market, this implies that your comments are moronic, and possibly have descriminatory inclinations like all those in europe who say Turkey is not in Europe.When in fact it is in Europe, and what they really want to say is that Turkish people are not of their culture/religion/etc. All what they have to say is say it that way rather than insulting the intelligence of others. Those Euro trash (except England) are racist, pure and simple. Are you from Europe?
     
  4. Hey lunatic - try decaf.

    All he was referring to in "devaluation" was that the TRY might move down as the dollar moves up.
     
  5. Brandonf

    Brandonf ET Sponsor

    devaluation? Isn't the lira traded in a free market? yes, basically.

    If yes, how could you use the word devaluation? Because the price of the Lira could fall for any number of reasons, thus it would be "devalued".

    BTW, when you start calling people a racist and you have no basis for doing so you start to lose any credibility you might have had with intelligent people. Also, if you find any of those riskfreetrades, please be sure to pass them along.
     
  6. If it is traded in the international free market, I would say look forward to a valuation. Why? Because of the carry trade, and the implicit undervaluation put in by people like the poster of the above comment. Years from now, they may buy from you at a dear price, and will be happy to do it. Later they would realize they are holding the bag, which happens in any instrument traded in a free market (Lira or not. Look at any chart and you will see it. Bag holders are everywhere including here at ET).
     
  7. Thanks Ivanovich.

    And yes, by devaluation I meant that the TRY exchange rate may become worse (more liras required to buy one dollar), resulting in a net loss to the OP.
     
  8. That is not a devaluation! devaluation have an exact meaning. Use the same word for other securities and you willsee what happens to you on ET and everywhere else.
     
  9. Devaluation implies that there is fixing of prices by a certain authority. Therefore, the price is not determined by a free market.
     
    #10     Feb 19, 2008