Turkish lira drops to six-month low on U.S. spat, Iranian oil ban
Turkey’s embattled lira fell to the lowest levels against the dollar since a currency crisis ravaged the economy last year
The lira dropped 0.9 percent to 5.878 per dollar in Istanbul on Wednesday morning local time, taking losses this year to 10 percent. That was the weakest since Oct. 23, equating to a six-month low.
Investors unease about Turkey has returned this year as political tensions with the United States resurfaced over plans by the NATO member to purchase S-400 missiles from Russia. Turkey has also slammed a U.S. decision this week to end exemptions on Iranian oil imports, a measure that is likely to pressure the country’s inflation rate, which stands at 19.7 percent.
The lira hit a record low of 7.23 against the dollar in August after investors’ concerns about an overheating economy were exacerbated by U.S. sanctions imposed for Turkey’s detention of a U.S. pastor on terrorism charges.
The lira is also falling after analysts gave a lukewarm reception to the government’s latest plans to restructure the economy. The measures, announced this month, lack detail, they say. Turkey’s economy has slipped into recession, meaning some banks, which are seeing a surge in non-performing loans, will need to be recapitalised as consumers and businesses struggle to make ends meet.
The Treasury and Finance Ministry, run by President Recep Tayyip Erdoğan’s son-in-law Berat Albayrak, is offering about $4.2 billion of euro-denominated five-year bonds on Wednesday to help recapitalise Turkey’s state-run banks. Other lenders may also need to raise capital, the government says.