Turkish lira takes the plunge after Erdogan's 'unwise' twitter move
The Turkish lira weakened following Prime Minister Recep Tayyip Erdogan’s decision to block access to Twitter nine days before local elections.
The currency dropped by as much as 0.7 percent before trading 0.4 percent weaker at 2.2387 per dollar during morning trading in Istanbul.
Yields on two-year notes rose nine basis points to 11.50 percent in their third day of increases, approaching the highest level since July 2009. The Borsa Istanbul 100 Index dropped 0.9 percent.
Twitter access was blocked after Erdogan said the microblogging service ignored court orders to remove content related to a government corruption scandal.
Erdogan said at a party rally Thursday that he would “dig up Twitter and so on – all of them [social media websites] – from the roots.” Last week he also said Turkey might block access to Facebook and Google Inc.’s YouTube.
“The concern is that political noise will increase before the elections,” to be held on March 30, Erkin Isik, a strategist at Turk Ekonomi Bankasi AS, said Friday.
Political tensions have escalated since the graft probe surrounding Erdogan’s government became public on Dec. 17. Protests broke out after the release of audio tapes, purportedly of Erdogan instructing his son to hide large amounts of money, last month. Erdogan has said the tape, which was one of dozens released via anonymous accounts on Twitter, was fabricated.
“The AKP’s actions in the last few months have been increasingly heavy-handed,” Manik Narain, a currency strategist at UBS AG in London, said Friday. He forecasted that the lira would fall to 2.3 per dollar within a month.
The currency weakened 0.9 percent on March 19 after U.S. Federal Reserve Chair Janet Yellen said interest rates could rise in “around six months” after asset purchases end, most likely in the fall. Data last week showed that Chinese industrial production and retail sales also expanded slower than predicted.
“The external environment remains very fickle, and while investors are waiting to see what March 30 brings, structural concerns about Chinese leverage offsetting stimulus [in Turkey] and rising U.S. rates are not a great environment for the lira,” Narain said.
- Understanding the ripple effect: 8 reasons the US economy has slowed down in Q1 of 2015
- Can Bahrian emerge from the oil price plunge 'stronger than ever'?
- Egyptian stocks plummet as Yemen confict deepens
- UAE sweetens flotation regulations to attract more investment
- Replacing Switzerland? Why Lebanon isn't keeping its banking secrecy a secret