Turkish lira eases to 2.7 versus dollar as election nears
REUTERS PhotoThe Turkish Lira slipped to 2.7 to the dollar on June 4 as the U.S. currency gained globally, while concerns that the parliamentary elections might result in a coalition government continued to weigh on sentiment.
In its Beige Book report of anecdotal information on business activity collected from contacts nationwide, the U.S. central bank (Fed) said on June 3 that U.S. economic activity expanded from early April to late May and that growth was expected to continue at a “modest” to “moderate” pace against the backdrop of declining oil and gas investment.
The lira weakened as far as 2.7061 from 2.6895 late on June 3, hit by gains in the dollar, which benefited from data pointing to a pickup in the U.S. economy.
The euro also rallied across the board on June 4 as German Bund yields reached eight-month highs, extending gains made after the European Central Bank played down the impact of bond market volatility.
In Turkey, recent polls have suggested the ruling Justice and Development Party (AKP) may have to form a coalition government. Several analysts fear such an outcome could lead to policy paralysis in the economy or trigger fresh elections.
The Turkish currency weakened nearly 14 percent this year, making it one of the worst performers among emerging market currencies. It was approaching its record low of 2.7435 which it hit on April 24, according to Reuters data.
Shares also came under pressure after two days of strong gains.
“Given the uncertainty around the general election at the weekend, we don’t expect the upwards momentum to be lasting after the positive trend in the BIST yesterday,” Oyak Invest said in a research note, as quoted by Reuters.
The main Istanbul share index fell 1.82 percent to 81,876.35 points.
Energy sector shares fell 3 percent after a bourse news website issued a story saying an unnamed company in the sector was facing financial difficulties.