The Turkish lira records a new low due to monetary and geopolitical concerns
The Turkish currency fell to an all-time low of 8.05 against the US dollar on Monday, as a result of investor concern about the central bank’s decision to keep the main interest rate unchanged last week and geopolitical concerns.
The tension in relations with the United States, the dispute with France, the dispute between Turkey and Greece over maritime rights and the battles in Nagorno Karabakh caused investor concern.
The lira has fallen more than 1 percent from Friday’s closing level of 7.9650 lira, and was the worst performer in emerging markets.
The coin has lost 26 percent this year and more than half of its value since the end of 2017.
“The escalation of geopolitical tensions with the United States and the European Union is a new source of pressure that weakens the lira,” said a trader in the exchange market at a local bank.
Other factors are doubts about the reliability of monetary policy and the appropriateness of the lira’s return.
The central bank kept the benchmark interest rate at 10.25 percent and raised the delayed liquidity window to 14.75 percent, saying that broad tightening of financial conditions had already taken place after steps to contain inflation risks.
The central bank was expected to raise the interest rate 175 basis points to 12 percent last Thursday in light of the weak performance of the pound, which sparked concerns about high inflation and sharply diminishing foreign exchange reserves.
