The USD/TRY pair lost more than 1000 pips on Wednesday and fell to its lowest level since the impressive rally witnessed in August at 5.2778. As of writing, the pair was trading at 5.2975, losing 1.6% on a daily basis.
Although there were no clear fundamental drivers that seemingly boosted the demand for the Turkish lira, an improved market sentiment on Wednesday helped emerging market currencies gather strength. Similar to USD/TRY, the USD/ZAR pair also fell to its lowest level in more than three months.
Additionally, concerns over a possible economic slowdown in the U.S. and the sharp fall witnessed in major equity indexes since October heighten expectations of the Federal Reserve adopting a more cautious outlook regarding the number of rate hikes in 2019 and allow EM currencies that are sensitive to Fed rates outperform their peers.
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