Naharnet

Turkey's Battered Lira Tumbles Again over Outlook Fears

The Turkish lira on Monday lost over three percent in value against the dollar as the same concerns that have propelled the embattled currency to record lows failed to dissipate after a summer break.

The lira has lost just under a third in value against the dollar over the last month, as anxiety over the coherence of domestic economic policy coupled with sanctions announced by the United States generated market panic.

The currency was trading at 6.2 to the dollar, a loss of 3.1 percent on the day. It lost similar ground against the euro to trade at 7.2.

Turkish markets reopened on Monday after a week off for public holidays and the coming week will be crucial for the lira as European markets become more active after the summer break.

Analysts said that the same factors that at one point drove the lira above 7 to the dollar for the first time in history remain in place.

The government has yet to convince markets with a comprehensive economic strategy to fight inflation of almost 16 percent and a widening current account deficit.

The central bank is unwilling to raise interest rates in the face of stringent opposition from President Recep Tayyip Erdogan, raising concerns over its independence.

And the crisis with the United States is far from being resolved. Turkey is still holding American pastor Andrew Brunson under house arrest, one of the key factors behind the troubled ties between Ankara and Washington.

Jameel Ahmad, global head of currency strategy and market research at FXTM, predicted the lira would "remain under pressure for some time as the same structural concerns that terrified traders away from Turkish assets still remain unchanged."

Market sentiment was further clouded by economists at JPMorgan Chase slashing their growth forecast for Turkey in 2019 to just 1.1 percent.

Treasury and Finance Minister Berat Albayrak, who is Erdogan's son-in-law and his top pointman on the economy, was meanwhile holding talks in Paris with French counterpart Bruno Le Maire, his office said.


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