And it's getting worse: Turkish lira hits new low
Turkey's lira continued its downward slide on Friday and fell to a new record low of 2.33 against the US dollar despite the central bank's intervention in foreign exchange markets to defend the currency.
The lira's steep decline comes amidst a similar free fall in other emerging market currencies against the greenback. The South African rand, the Russian ruble and, especially, the Argentinean peso, which fell 13 percent Thursday, led the losses in value of emerging country currencies on Friday. The lira broke through the key barrier of 2.3 to the dollar just hours after the central bank said in a statement that it was intervening in the markets due to "unhealthy price occurrences." It did not give further details, but sources said the bank had sold more than $2.5 billion to shore up the lira. The fall in the lira seemed to worry investors, who pushed the main stock index Borsa İstanbul (BIST) down 1.8 percent.
The bank intervened in the markets also on Friday, yet there were no estimates as to how much money in US dollars it had injected into markets. The bank's net forex reserves have fallen below $40 billion already. This week, the central bank decided against supporting the lira with an interest rate increase, a decision some analysts said was taken due to pressure from the government.
The Turkish currency has been falling steadily amid concerns that a bribery and corruption scandal that has ensnared people close to Prime Minister Recep Tayyip Erdoğan might destabilize the government. Observers said an intimidating and non-conciliatory tone used by Erdoğan might hit foreign investments in the country. Ian Bremmer, founder of Eurasia Group, said on Thursday, “Turkey is no longer an emerging market,” and “The crisis in the country will only end when the country's leader, Erdoğan, quits.”
- 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
- Turkish markets hit hard by corruption scandal, and it's about to get worse
- The corruption saga continues: Turkish lira hits record low
- Turkey frees up banks’ lira reserves to strengthen crisis defense
- Turkish Lira hits historic low, Erdogan implies central bank 'treason'
- Turkish central bank injects dollars, euros to stabilize markets