Turkey’s currency hits 8-month low after decision to hold new İstanbul election

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This picture is taken on April 10, 2018 in Istanbul shows a screen displaying foreign exchange rates against Turkish liras as a man looks to the rates at Istiklal avenue. / AFP PHOTO / OZAN KOSE

Turkey’s currency weakened beyond 6.24 to the dollar on Thursday, hitting its weakest level in eight months amid concerns over the re-run of İstanbul’s mayoral election and tensions ahead of US-China trade talks, Reuters reported.

The lira fell as far as 6.2410 against the dollar at 0914 GMT, its weakest level since Sept. 24, sliding nearly 1 percent from its close of 6.1790.

After weeks of appeals by President Recep Tayyip Erdoğan’s ruling party and its nationalist ally, Turkey’s Supreme Election Board (YSK) ruled on Monday for a re-run of the İstanbul mayoral election, which was narrowly won by the opposition.

Turkey’s main opposition party said on Wednesday it had formally requested the annulment of Erdoğan’s mandate because the same flaws his party alleged in the city’s March 31 mayoral vote occurred in last year’s national elections.

Investors fear that the decision to hold a new İstanbul election on June 23 will add nearly two months of uncertainty over Turkey’s plan to rebalance and stabilize the economy.

Meanwhile, Turkey’s central bank said on Thursday it had decided to suspend one-week repo auctions for a period of time in response to what it said were developments in financial markets.

It lowered a foreign exchange maintenance facility within its so-called reserve options mechanism (ROM) to 30 percent, from 40 percent, to support financial stability.

The bank also said the FX maintenance facility within the ROM will provide $2.8 billion of FX liquidity to the market, while 7.2 billion lira will be withdrawn.

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