Turkey’s lira slides, hit by global sell-off and central bank worries

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A teller holds Turkish lira banknotes at a currency exchange office in Istanbul on August 13, 2018. Turkey's troubled lira tumbled on August 13 to fresh record lows against the euro and dollar, piling pressure on stock markets on fears the country's crisis could spill over into the world economy. / AFP PHOTO / Yasin AKGUL

Turkey’s lira slid 2 percent more against the dollar on Thursday, swept up in a global market sell-off and investor worries that lower-than-expected inflation data could prompt the central bank to make a premature rate cut, Reuters reported.

In the second day of 2019 trade, the lira was already showing the volatility that characterized last year, when it fell as much as 47 percent against the dollar, raising concerns about a banking crisis and an economic meltdown.

It has since recovered some of the losses, finishing last year down nearly 30 percent against the dollar.

Financial markets around the world were jolted on Thursday by a rare revenue warning from Apple, deepening concerns about slowing global economic growth and prompting investors to seek safety in bonds and less risky assets. Currency markets saw a wild spike in volatility in holiday-thinned trade in Asia, with the Japanese yen moving sharply higher against the US dollar.

The lira was also caught up in the so-called “flash crash,” briefly weakening as far as 6.4486 against the dollar in overnight trade. By 1155 GMT it was 5.4860 to the dollar, having weakened some 2 percent earlier in the European session.

Jitters were also increasing about the possibility of an early rate cut. Data on Thursday showed that inflation eased for the second straight month in December, helped by tax cuts and discounted products.

The next meeting of the Turkish central bank’s monetary policy committee (MPC) is on Jan. 16.

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