Turkish lira hits record low against dollar on strains in US ties
The Turkish lira hit a record low of 3.9780 against the dollar on Nov. 21, accelerating losses to some 17 percent since September as concerns widened about Ankara’s strained relations with the United States and central bank independence.
The central bank responded with emergency measures to tighten policy, although that failed to reverse the slide.
The lira’s plunge has helped fuel inflation by driving up the cost of energy and other imports. Turkey imports almost all of its energy needs.
Worries about U.S. ties center around the trial of Turkish gold trader Reza Zarrab, who is accused of violating U.S. sanctions on Iran.
The Turkish government spokesman described the case on Nov. 20 as a “clear plot against Turkey” that lacks any legal basis.
The currency fell as far as 3.9780 to the dollar, eclipsing a previous record low of 3.9417 set in January. It was at 3.9541 at 1111 GMT, after the central bank’s measures. Against the euro, the currency of some Turkey’s major trading partners, it touched a record low of 4.6711.
The Central Bank said it would remove banks’ borrowing limits on the interbank money market for overnight transactions, and increase their limit for the intraday liquidity facility -- both moves designed to shore up the currency.
An official from the bank said the weighted average cost of funding would be increased to 12.25 percent on Nov. 22, up from 11.99 percent on Nov. 20.
“All funding will be done via the late liquidity window,” the official said, referring to the highest of its multiple interest rates, which it hiked to 12.25 percent in April.