* Lira hits record low of 7.8682 to the dollar
* Russian stocks underperform regional peers
* “Perfect storm” of geopolitical tensions hitting Turkey- analyst
Oct 7 (Reuters) - Turkey’s lira hit a record low against the U.S. dollar on Wednesday as souring relations between Ankara and Brussels added to the country’s geopolitical woes, while broader emerging market currencies steadied despite a delay in new U.S. stimulus.
The lira sank as much as 1% due to lingering concerns over the Caucasus conflict and possible U.S. sanctions, while the European Union said chances of Turkey’s potential entry into the bloc were evaporating.
The currency is one of the worst performers among its emerging market peers so far this year, having shed nearly a third of its value.
The tourism-dependent Turkish economy has been hit hard by the COVID-19 pandemic. Elevated inflation levels and a second wave of coronavirus cases worldwide are expected to hamper the country’s fledgling recovery.
“It’s a perfect storm at the moment hitting Turkey... It’s one of the most vulnerable emerging markets out there due to a very fragile institutional setup and very large external funding needs,” said Jakob Christensen, chief analyst, head of EM research at Danske Bank.
Turkish stocks fell about 0.2%.
Other emerging market currencies strengthened in anticipation of eventual U.S. stimulus measures, despite U.S. President Donald Trump’s surprise decision to call off stimulus talks until after the Nov. 3 presidential election.
South Africa’s rand rose sharply after losing for the prior two sessions, but moved within a trading range seen since last month.
Russia’s rouble firmed ahead of treasury bond auctions due later in the day. The currency has weakened substantially over the past few months due to rising COVID-19 cases and geopolitical risk around Russia.
Russian equities were among the worst emerging market performers, as weak oil prices hit heavyweight oil and gas stocks.
But the MSCI’s index of emerging market stocks rose slightly, holding at a more-than two-week high on some strength in major Asian markets.
Central European stocks were a shade higher, while currencies gained slightly against the euro.
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For RUSSIAN market report, see (Reporting by Ambar Warrick in Bengaluru; Editing by Rashmi Aich)
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