Turkey’s lira sinks, setting new record low against US dollar
ISTANBUL, Turkey (North Press) – Turkey’s lira reached a new record low on Monday, trading at 8 lira against the US dollar for the first time after Turkish President Recep Tayyip Erdogan challenged the United States to implement sanctions over his government’s decision to test its Russian-made air defense system.
The renewed tumult in the country’s asset markets followed a series of combative exchanges between senior Turkish officials and their western counterparts over the weekend.
The currency’s 1.3 percent decline left it down by more than a quarter since the end of 2019, pushed lower by a combination of growing geopolitical tensions and investor concerns about the management of the country’s economy. Turkey’s stock market was also under pressure, with Istanbul’s Bist 100 share index down more than 1 per cent.
Turkish President Recep Tayyip Erdogan joins calls for a boycott of French goods, ramping up a standoff between France and Muslim countries over Islam and freedom of speech.
France recalled its ambassador to Ankara after Erdogan said that Emmanuel Macron needed mental treatment in response to the French president’s controversial comments about Islam. Other senior Turkish officials also launched a series of strongly worded attacks on Europe, comparing its treatment of Muslims to the demonization of Jews in the 1920s.
The Borsa Istanbul (abbreviated as BIST) is the sole exchange entity of Turkey combining the former Istanbul Stock Exchange.
The Central Bank has kept the policy rate (one-week repo auction rate) constant at 10.25 percent. Following this decision, the exchange rate of the US dollar has hit 7.95 Turkish Lira and that of Euro 9.40 Turkish Lira.
Chaired by Central Bank Chair Murat Uysal, the Monetary Policy Committee has issued a press release after its meeting.
After reaching a new record low against the US dollar on Friday (October 23), following the Central Bank’s decision to keep the policy rate constant, the Turkish lira has fallen to 8 per dollar for the first time.
Starting the first trading day of the week with a rise, the dollar is currently trading at 8.0230.
Also, the Euro is sold at 9.4970 with a 0.5 percent increase and the UK pound is sold at 10.4480 with a 0.6 percent increase.
The dollar index stabilized at 92.9, with an increase of 0.2 percent. The Euro/dollar parity is 1.1840.
Markets today will follow the sectoral confidence indices in Turkey and the ifo index in Germany, the Chicago Fed national activity index in the US, new home sales and the Dallas Fed manufacturing industry index abroad.
NATO has said that the Russian system poses a threat to the military alliance and particularly endangers the technical secrets of the F-35.
The lira has lost around 25% of its value this year as the coronavirus pandemic continues to batter the economy and amid concerns over Turkey’s troubled relations with the United States and several European nations.
For months, the US warned Ankara that it risked sanctions under the Countering America’s Adversaries Through Sanctions Act if the S-400 system was activated. President Donald Trump, however, has held back on implementing the sanctions amid hopes Erdogan will not go ahead with activating the missiles.Reporting by Muhammed Khier Ahmed