Consistent pessimism with regards to the Turkish economy has lead the lira to new lows, with the exchange rate currently at 1,472,000 liras to the dollar in intra-bank trading, according to AFP news agency.
Since Turkey’s financial crisis that took place in February, the country’s currency has lost more than half of its value, having depreciated by 53.1 percent. In addition, since transaction volumes on the foreign exchange market remain low, every speculative action highly affects the currency rates.
Although the Turkish government has tried to soothe the markets by stressing that an IMF-backed economic program will soon take place, the national index of the Istanbul stock exchange lost 4.3 percent on Tuesday, July 17, to close at 8,689 points. Prime Minister Ecevit’s remarks did not seem to yield higher investors confidence as an atmosphere of pessimism continues to cloud the Turkish economy.
Financial actors, however, believe the pessimism and continuously tumbling economy is due to the lack of government efforts to lift sentiment following a recent dispute between Ankara and the IMF over Turkish Telekom management, that had further hit the already unstable market.
Two weeks ago, the IMF delayed the release of a $1.5 billion loan due to a dipute over the management of the Telekom company—a move that further triggered fear and uncertainty with regards to the government’s commitment to reforms. The loan was released on July 12, when Turkey agreed to make the necessary changes. However, investors remain worried that frequent intra-government disputes could destroy the IMF-backed program.— (MENA Report)
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