Lira rally may be short-lived on U.S. sanctions threat – strategist

The Turkish lira’s gains since an agreement between the United States and Turkey late on Thursday to pause Turkey’s incursion into Syria could be temporary, said Piotr Matys, an emerging markets currency strategist at Rabobank.

There is a danger that the five-day ceasefire agreement won’t hold or that Congress will still implement damaging economic sanctions against President Recep Tayyip Erdoğan’s government, Matys said in a report, according to FXStreet.

“The risk of tough economic sanctions hasn’t vanished,” Matys said. “There seems to be – based on comments from various lawmakers – a relatively strong incentive on Capitol Hill to penalise Turkey for its military offensive in northern Syria, even if it is rational and justified from the Turkish perspective due to the overwhelming number of Syrian refugees and Kurdish fighters being a threat to Turkey’s security.”