Turkish lira hits new low on worries over economy, US row

Turkish lira hits new low on worries over economy, US row

ANKARA/ISTANBUL
Turkish lira hits new low on worries over economy, US row

The Turkish Lira briefly tumbled to a fresh low near 6.5 per dollar on Aug. 10, as a deepening rift with the United States and intensifying worries about the state of the economy dragged on the currency again.

The lira pared some of its losses to trade at 5.9646 against the dollar at 0745 GMT, down 5.5 percent, after slumping as much as 14.6 percent to hit an all-time low of 6.4915 in early trade, according to Reuters data.

The two governments are at odds over the detention in Turkey of U.S. evangelical pastor Andrew Brunson on terror charges, raising investors’ concerns.

Investors also cited what they say is a lack of intervention from authorities to address the lira’s weakness as a key reason for the consecutive daily falls.

If they have their dollars, we have our people and God, Erdoğan says
If they have their dollars, we have our people and God, Erdoğan says

Meanwhile, concerns were intensified on Aug. 10 by a report in the Financial Times that the supervisory wing of the European Central Bank (ECB) had over the last weeks began to look more closely at eurozone lenders’ exposure to Turkey.

The report said that the situation is not yet seen as “critical” but Spain’s BBVA, Italy’s UniCredit and France’s BNP Paribas are regarded as particularly exposed.

The lira has fallen more than 35 percent this year after losing nearly a quarter of its value in 2017.

“The lira is trading in extreme volatility after having started the day with a sharp fall,” a foreign exchange trader at a bank in Istanbul said, as quoted by Reuters on Aug. 10.

“The moves have been exaggerated due to stop losses in Japanese Yen/lira ... but for a real pullback (of the dollar), we need to see action from the central bank.”

In a speech overnight in the northeastern Turkish town of Rize late on Aug. 9, President Recep Tayyip Erdoğan dismissed concerns over the tumbling currency, calling on Turks to “have no worries,” and adding: “If they have their dollars, we have our people, our God.”

Eyes will be on Treasury and Finance Minister Berat Albayrak’s announcement on Aug. 10. He is due to announce the government’s latest plan for the economy at a press conference later at 1130 GMT.

Turkish Lira, Turkish economy, currency