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Expand chart
Data: Money.net; Chart: Axios Visuals

The Turkish lira strengthened against the dollar on Thursday after Turkey agreed to pause its offensive in Syria for 5 days to let Kurdish forces withdraw from a “safe zone" Turkey has established.

The big picture: Neither the ceasefire nor the bullish run that Turkey's bonds and currency have seen recently is sustainable, Petar Atanasov, co-head of sovereign research at emerging markets asset manager Gramercy, tells Axios.

  • "There are risks and fragilities in the Turkish economy that probably are not a problem now, but they will over time become more serious if the policy trajectory is not adjusted."

The big economic risk is that the removal of the threat of sanctions from the U.S. will give Turkey's central bank cover to continue cutting interest rates to a level below inflation, stamping out a meaningful recovery in its current account and leading to another pickup in inflation.

  • "So in some ways today's detente, if it holds, actually is laying the seeds for currency weakness over the next 3 to 6 months, because the odds that the central bank overplays its hand has increased," Ed Al-Hussainy, senior interest rate and currency analyst at Columbia Threadneedle, tells Axios.

Details: The lira has fallen by more than 10% so far this year, despite efforts by the central bank and Turkish President Recep Tayyip Erdoğan to hold it steady.

  • However, it has risen meaningfully from its all-time low hit in August 2018. Turkish state-owned banks have been buying the currency since the Syria incursion began last week, bankers and strategists said, and are expected to continue.

Go deeper

Texas early voting surpasses 2016's total turnout

Early voting in Austin earlier this month. Photo: Sergio Flores/Getty Images

Texas' early and mail-in voting totals for the 2020 election have surpassed the state's total voter turnout in 2016, with 9,009,850 ballots already cast compared to 8,969,226 in the last presidential cycle.

Why it matters: The state's 38 Electoral College votes are in play — and could deliver a knockout blow for Joe Biden over President Trump — despite the fact that it hasn't backed a Democrat for president since 1976.

Wall Street braces for more turbulence ahead of Election Day

Illustration: Eniola Odetunde/Axios

Wall Street is digging in for a potentially rocky period as Election Day gets closer.

Why it matters: Investors are facing a "three-headed monster," Brian Belski, chief investment strategist at BMO Capital Markets, tells Axios — a worsening pandemic, an economic stimulus package in limbo, and an imminent election.

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4 hours ago - World

How Biden might tackle the Iran deal

Photo illustration: Aïda Amer/Axios. Photo: Drew Angerer/Getty Images

Four more years of President Trump would almost certainly kill the Iran nuclear deal — but the election of Joe Biden wouldn’t necessarily save it.

The big picture: Rescuing the 2015 Joint Comprehensive Plan of Action (JCPOA) is near the top of Biden's foreign policy priority list. He says he'd re-enter the deal once Iran returns to compliance, and use it as the basis on which to negotiate a broader and longer-lasting deal with Iran.

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