3 currencies not to touch with a ten-foot pole for now

The currencies market has been on edge in the past few days as investors focus on the rising inflation and the ongoing crisis in Europe. Here are the three currencies to avoid as the crisis in Ukraine continues and as the Fed gets more hawkish.

Euro

The euro has been in a strong sell-off in the past few days. Indeed, the EUR/USD, EUR/GBP, EUR/CAD, and EUR/CHF have all dropped to the lowest level in years. The reason for this performance is that the euro is directly affected by the ongoing crisis in Ukraine. For example, the European Union gets most of its crude oil and natural gas from Russia.

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As a result, there are concerns about stagflation, which happens when a high inflation rate is significantly higher in a time of slow growth. Also, there are concerns about whether the European Central Bank (ECB) will start rising interest rates this year.

Russian rouble

The Russian rouble has been in a remarkable crash in the past few days. The USD/RUB and EUR/RUB have all risen to their highest levels on record. They have also risen by more than 45% since Monday last week.

The performance of the Russian ruble is the fact that the Russian economy has grown more isolated from the international world. During the weekend, Mastercard and Visa became the latest companies to announce an exit from the country. Other firms that have stopped offering their services to Russia are Wise, Microsoft, Apple, BP, and Shell.

The main concern is that the Bank of Russia lacks the tools it needs to support a plummeting currency since western countries have blocked its liquidity.

Turkish lira

The Turkish lira has been in a tight range in the past few days. The USD/TRY is trading at 14.22, which is about 7.45% above its lowest level this year. The pair is just a few points below its all-time high and there is a likelihood that the worst will continue happening. 

The main reason why the lira will continue falling is that the Central Bank of the Republic of Turkey (CBRT) has been stubborn about its monetary policy. The bank has taken a more dovish policy even as inflation surges. Data published last week showed that the overall inflation rate rose by 54.4% in February while the PPI more than doubled.