ALBAWABA – The Turkish Lira crashed to a new record low of TRY22.8537 against the United States (US) dollar on Wednesday in what Bloomberg described as a sign that Turkey’s new government is loosening its grip on the country’s finances.
The Turkish lira dropped 5.4 percent Wednesday, having already lost more than 10 percent of its value against the greenback since the re-election of President Recept Tayyip Erdogan in May.
Under his presidency, the lira lost most of its value in the last couple of years, and struggled to maintain its value against the dollar in recent months. The central bank has all but exhausted its supply of hard currency to bolster the Turkish lira.
Analysts and economists have celebrated his appointment in hopes that Turkey would revert to more orthodox monetary policy and reduced intervention in markets.
However, Goldman Sachs Group Inc. analysts recently revised their forecast for the US dollar-Turkish lira pair higher, citing increased pressure on the currency.
The bank sees the lira depreciating to TRY28 per dollar in 12 months, compared with a previous projection of 22, according to a report dated June 3, carried by Bloombreg.
Japanese retail investor flows may have contributed to the currency’s swoon in early Wednesday trading, said Fujitomo Securities Chief Technical Analyst Tetsuya Yamaguchi. “As the Turkish lira kept weakening, there might have been some stop-losses triggered in the lira and yen market,” he said, noting increased volumes in the yen-lira trade.
