Retail forex broker XM has issued a warning about a substantial increase in market volatility and a decline in liquidity, to be caused by the Turkish general elections that will be held this Sunday, November 1. The vote could also cause abnormal spreads and gaps in the pricing of the the USD/TRY and the EUR/TRY currency pairs.
1% margin for USD/TRY and EUR/TRY in place till Monday
To avoid losses, FX is introducing a higher margin of 1 percent for these pairs, for both existing and new positions, effective October 30, from 9 pm server time, which is GMT+2. The measure will only affect clients who will be maintaining their positions on these currency pairs. Clients who intend to close or open such positions will need to make sure they have enough funds in their accounts, the company notes.
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The precautionary measure will be in effect until November 2, by the end of the first hour after the market opens. From then on, the margins will return to their previous levels, in accordance with clients’ individual settings.
The country is heading for a second parliamentary vote after a hung parliament gave no basis for a single party majority. The ruling AKP (Justice and Development Party) has chosen to go to snap elections hoping to get a parliamentary majority and form a government on its own after the June elections failed to produce an outright winner.