* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Turkish lira skids as Erdogan dumps central banker
* Yen makes modest gains, eyes on Japanese retail investors
* Stock futures point to limited fallout so far
By Wayne Cole
SYDNEY, March 22 (Reuters) - Asian markets faced a fresh stress test on Monday as a plunge in the Turkish lira lifted the safe-haven yen and blunted risk appetite, although the fallout so far looked to be relatively contained.
The dollar was trading almost 15% higher on the lira TRYTOM=D3 at 8.3000 after President Tayyip Erdogan shocked markets by replacing Turkey's hawkish central bank governor with a like-minded critic of high interest rates. decision to fire Governor Agbal, who had sought to instil some price stability and perception of Bank independence, now raises question as to whether the new Governor will look to lower rates while still aim to fight higher inflation," said Rodrigo Catril, a senior FX strategist at NAB.
Investors are still struggling to deal with the recent surge in U.S. bond yields, which has left equity valuations for some sectors, particularly tech, looking stretched.
Bonds had another wobble on Friday when the Federal Reserve decided not to extend a capital concession for banks, which could lessen their demand for Treasuries. damage was limited, however, by the Fed's promise to work on the rules to prevent strains in the financial system.
Monday's tumble in the lira saw the yen firm modestly, with notable gains on the euro EURJPY= and Australian dollar AUDJPY= . That in turn dragged the euro down slightly on the dollar to $1.1880 EUR=D3 .
Also lifting the yen were concerns Japanese retail investors that have built long lira positions, a popular trade for the yield-hungry sector, might be squeezed out, so triggering another round of lira selling.
Still, analysts at Citi doubted that episode would lead to widespread pressure on emerging markets, noting the last time the lira slid in 2020, there was little spillover.
"In terms of impact on other parts of the high-yielding EM, we believe that will be quite limited," Citi said in a note.
Oil prices fell anew, having shed almost 7% last week as concerns about global demand prompted speculators to take profits on long positions after a long bull run. O/R
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https://tmsnrt.rs/2zpUAr4 Asia-Pacific valuations
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