First Published: 2017-01-11

Turkey lira takes new pounding on forex markets
Lira is under new pressure as central bank’s emergency measures fail to impress foreign exchange markets.
Middle East Online

ANKARA - Turkey's embattled lira on Wednesday took a new pounding on foreign exchange markets as emergency measures announced by the central bank failed to impress markets rattled by terror attacks and political instability.

The lira has lost almost 10 percent in value against the American dollar since the start of this year alone with President Recep Tayyip Erdogan's plan for a presidential system, currently debated by parliament, unnerving investors.

The lira lost 1.15 percent against the dollar to trade at 3.84 to the greenback, having earlier reached a new historic low in value of 3.89.

Against the euro, the lira crashed through the 4.0 ceiling for the first time in history to trade at 4.06 to the euro, a loss of 1.19 percent in value on the day.

Economists have expressed alarm that the pressure could continue due to concerns over security and political stability as Erdogan drives for a presidential system under a new constitution.

The central bank on Tuesday sought to halt the slide by relaxing foreign exchange rules to inject 1.5 billion dollars into the market.

But the move failed to halt the bloodletting on the markets with analysts saying more was needed.

"Directionally, we see these measures supportive for the currency," economists at Finansbank said in a note to clients.

But they added: "In terms of magnitude, however, it is a different story. We think the impact on currency is likely be limited."

Despite the turbulence that has seen the lira lose 25 percent against the dollar in the last three months alone, Turkish officials remained sanguine.

"The exchange rate is not more important than the current account, deficit, employment, growth or inflation," Turkey's Economy Minister Nihat Zeybekci was quoted as saying by the Hurriyet daily.

Cemil Ertem, a senior advisor to Erdogan, blamed a conspiracy from abroad to encourage speculation and devalue the lira during the constitution debate.

"There's an operation going on to quickly devalue the Turkish lira. This is not a conspiracy theory. It's a very clear reality," he said.

Hurriyet's economic columnist Ugur Gurses said the central bank was powerless to make any major change given the political background and could only act as a "fire brigade".

"The turbulence experienced in the Turkish financial markets is completely fuelled by the political field," he wrote.

 

World leaders condemn Britain terror attack

UN-backed Syria talks restart in Geneva

10 Egyptian soldiers killed in Sinai roadside bombings

Erdogan warns Europeans risk being ‘unsafe’ on world’s streets

Saudi film festival launch postponed after sandstorm

Britain arrests eight as IS claims Westminster attack

Man attempts to drive into crowd of shoppers in Belgium’s Antwerp

Palestinian FA chief says ball in Israel's court

Israel arrests Jewish teen over anti-Semitic terror threats

An Egypt court is to reopen a corruption probe into Mubarak

Bahrain frees award-winning AFP photographer

Erdogan slams 'pressure' on Turks in Bulgaria ahead of vote

Israel policeman suspended after caught on video beating Palestinian

Turkey summons Russia envoy over soldier death in Syria

Bahrain sentences three to death for police bombings

EU summons Turkey envoy over 'safety' remarks

400,000 'trapped' in west Mosul's Old City

Qaeda, IS developing harder-to-detect bombs say experts

Terrorist attack at London’s Houses of Parliament

2016 saw sharp rise in illegal Israeli settlement projects

US-led coalition vows lasting victory against IS

Bahrain arrests photographer on unspecified charges

Humanitarian groups demand access to Yemen civilians suffering 'open-air massacre'

33 killed in US-led air strike on north Syria

Rights group says Libyan military committed war crimes

Israel seals East Jerusalem home of Palestinian attacker's family

Migrants in Europe at risk of drug-resistant tuberculosis

Iraqis urged to avoid hurried mass grave exhumations

Turkey steps up objection to US flight laptop ban

Britain joins US in banning laptops on flights from Turkey, Arab world

Anti-IS coalition gathers in Washington to hear Trump plan

Turkey links Gulen to murder of Armenian journalist

Kuwait bans hit movie ‘Beauty and the Beast’

Five dead in Mogadishu bombing

Khamenei fleshes out 'Made in Iran' vision

Turkey to ask US to reverse flight laptop ban

Israeli army says Hezbollah commander killed by own men

Kurds celebrate Newroz in Turkey's southeast despite shooting

Turkey’s AKP says no more campaign rallies in Germany

Chinese president calls for peace in meeting with Netanyahu

Iraq forces gain ground in Mosul

US bans electronic devices from cabins on Middle East flights

Erdogan says yes vote best response to 'fascist Europe'

Arab Israeli woman gets 50 months prison for joining IS

All Syria sides confirm attendance at Geneva talks