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Prospects Daily: Turkey’s central bank intervenes in foreign exchange markets to defend the sliding lira, U.S. weekly jobless claims inch higher but remain near recent lows, China’s manufacturing sector contracts

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Financial Markets… Turkey’s central bank intervened directly in foreign exchange markets on Thursday for the first time since 2012, selling U.S. dollars to support the lira. The move came after the lira fell to a fresh low of TL2.2931 against the dollar. Mid-morning the lira was trading at TL2.2660 to the dollar, down 0.24% from the previous day.
 
U.S. stocks suffered steep losses in morning trading on Thursday as preliminary data showed manufacturing growth slowing for the first time in three months in the U.S., while contracting in China in January.  The Dow Jones Industrial Average fell by as much as 168 points, or 1.03%; and the S&P 500 index declined 16.9 points, or 0.9%, with the financial sector hardest hit.
 
High Income Economies…In the week ended January 18th, U.S first-time jobless claims edged up to 326,000, an increase of 1,000 from the previous week's revised figure of 325,000.  The less volatile four-week moving average fell to 331,500 from the previous week's revised average of 335,250, hitting its lowest level since the first week of December.  Meanwhile, continuing claims rose to 3.06 million in the week ended January 11th from the preceding week's revised level of 3.02 million.
 
South Korea's GDP expanded 0.9% (q/q sa) in Q4 2013 following a 1.1% increase in Q3.  The latest increase was less than expected and led by large gains in facilities investment, and, to a lesser extent, private consumption.  Exports and imports also gained, while construction investment declined.  On an annualized basis, GDP expanded 3.7% (q/q saar) in Q4 and 4.3% in Q3.
 
Developing Economies…East Asia and Pacific: China’s preliminary HSBC Manufacturing Purchasing Managers’ Index (PMI) fell in January, declining to 49.6 from 50.5 in December, moving below the 50 score  that marks a contraction in activity. Underlying the January flash PMI reading, the manufacturing output index fell to its lowest level in three months, new orders decreased, new export orders fell for the second consecutive month, and employment contracted at a steeper pace.
 
Sub-Saharan Africa: Ghana’s GDP growth slowed markedly in the third quarter of 2013, coming in at 0.3% (y/y) down from 6.1% in the previous quarter, on account of lower gold and oil production. A sharp fall in global gold prices is seen to have affected production in that sector.
 
Meanwhile, Nigeria’s GDP growth strengthened in the third quarter of 2013, accelerating to 6.8% (y/y) up from 6.2% in the previous quarter. The non-oil sector continued to sustain the Nigerian economy, expanding 7.9% (y/y) in the third quarter, up from 7.5% the previous year.

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