Turkish Lira weakens to record low against euro as economy worries mount

Turkish Lira weakens to record low against euro as economy worries mount

ISTANBUL
Turkish Lira weakens to record low against euro as economy worries mount

The Turkish Lira weakened to a record low of nearly 4.84 against the euro on March 19 and hit the lowest level since early December against the dollar following investor concerns over the macroeconomic outlook and the prospect of U.S. interest rate hikes.

Against the U.S. currency, the lira weakened as far as 3.94, closing in on a record low of 3.98, which it hit in late November, according to Reuters data.

The main share index fell 0.85 percent.

Fed Chair Jerome Powell will hold the first press conference on March 21 amid expectations of a faster pace of U.S. rate hike.

The dollar edged higher against a basket of rivals on March 19 after posting four consecutive weeks of gains as financial markets braced for the first rate hike of the year from the Federal Reserve.

In the wake of the Federal Reserve meeting, which will likely lead to a rate hike, the lira has been one of the worst performing emerging currencies, a trend also driven by various economic and geopolitical concerns.

The plunging trend in the lira resumed two weeks ago when Moody’s downgraded Turkey’s sovereign rating to Ba2 from Ba1, citing a continued loss of institutional strength and the increased risk of an external shock given its wide current account deficit.

Turkey’s current account deficit widened by $4.4 billion year-on-year to reach nearly $7.1 billion in January, the Central Bank stated on March 12.

Economy, Turkish lira, Federal Reserve