Times of Oman
Turkish lira hits fresh record low of 3.98 against dollar
November 22, 2017 | 2:49 PM
by Reuters
Turkish Lira banknotes are seen in this October 10, 2017 picture illustration. Photo - Reuters/Murad Sezer/Illustration/Files
 
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Istanbul: The Turkish lira hit a record low of 3.98 against the dollar on Wednesday, extending a slide of some 17 per cent since September on investor worries about strains in Turkey's ties with the United States and the independence of its central bank.

At 0620 GMT, the lira stood at 3.9725 to the U.S. currency, weakening from a close of 3.9570 on Tuesday, when the Turkish central bank (TCMB) responded to the lira weakness with emergency measures to tighten policy.

"The TCMB's veiled rate hike yesterday was a step taken to buy time ahead of the December 14 MPC (monetary policy committee) meeting and avoid an interim meeting," said Reel Kapital Securities deputy research manager Enver Erkan.

"We do not see this step having a positive impact in the market because it is not a sufficient move," he said."Hence we expect the negative trend in the lira to continue."



The current focus of worries is the U.S. trial of Turkish gold trader Reza Zarrab, who is accused of violating U.S. sanctions on Iran.

The Turkish government spokesman has described the case as a "clear plot against Turkey" that lacks any legal basis.

Foreign investors, needed by Turkey to finance its large budget and current account deficits, also have deep concerns about political pressure on the central bank.

Erdogan, who wants lower interest rates to fuel lending and construction, said last week a lack of government intervention in policy had left Turkey saddled with high inflation.

The yield on the benchmark 10-year bond rose to 13.08 per cent in spot trade on Tuesday from 12.68 per cent a day earlier.

It dipped to 13.01 per cent in Wednesday-dated trade.

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